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Tax liability side equivalence in an experimental posted offer market

Author

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  • Borck, R.
  • Engelmann, D.
  • Müller, W.

    (Tilburg University, School of Economics and Management)

  • Normann, H.T.

Abstract

In theory, the incidence of a tax should be independent of the side of the market on which it is levied. This principle of liability‐side equivalence underlies virtually all theories of tax incidence. Policy discussions, however, tend to place great emphasis on the legal division of tax payments. We use computerized experimental posted‐offer markets to test liability‐side equivalence. We find that market outcomes are essentially the same when the tax is levied on sellers as when it is levied on buyers. Thus, we cannot reject liability‐side equivalence.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Borck, R. & Engelmann, D. & Müller, W. & Normann, H.T., 2002. "Tax liability side equivalence in an experimental posted offer market," Other publications TiSEM bac0e339-660b-4215-99d4-c, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:bac0e339-660b-4215-99d4-c253b77c5cf0
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    Cited by:

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    2. Andrea Morone & Francesco Nemore & Simone Nuzzo, 2018. "Experimental evidence on tax salience and tax incidence," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(4), pages 582-612, August.
    3. Matthias Sutter & Jürgen Huber & Michael Kirchler & Matthias Stefan & Markus Walzl, 2020. "Where to look for the morals in markets?," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 30-52, March.
    4. Kai A. Konrad & Florian Morath & Wieland Müller, 2014. "Taxation and Market Power," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 173-202, February.
    5. Rupert Sausgruber & Jean-Robert Tyran, 2005. "Testing the Mill hypothesis of fiscal illusion," Public Choice, Springer, vol. 122(1), pages 39-68, January.
    6. Riedl, Arno & Tyran, Jean-Robert, 2005. "Tax liability side equivalence in gift-exchange labor markets," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2369-2382, December.
    7. Engelmann, Dirk & Müller, Wieland, 2011. "Collusion through price ceilings? In search of a focal-point effect," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 291-302, August.
    8. Tomer Blumkin & Ehud Menirav, 2009. "Framing the rabbit to snare the votes," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(4), pages 603-634, May.
    9. Cason, Timothy N. & Gangadharan, Lata & Nikiforakis, Nikos, 2011. "Can real-effort investments inhibit the convergence of experimental markets?," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 97-103, January.
    10. Kotakorpi, Kaisa & Nurminen, Tuomas & Miettinen, Topi & Metsälampi, Satu, 2024. "Bearing the burden — Implications of tax reporting institutions on evasion and incidence," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 81-134.
    11. Blumkin, Tomer & Ruffle, Bradley J. & Ganun, Yosef, 2012. "Are income and consumption taxes ever really equivalent? Evidence from a real-effort experiment with real goods," European Economic Review, Elsevier, vol. 56(6), pages 1200-1219.
    12. Arno Riedl, 2009. "Behavioral and Experimental Economics Can Inform Public Policy: Some Thoughts," CESifo Working Paper Series 2902, CESifo.
    13. Werner, Peter & Riedl, Arno, 2018. "The role of experiments for policy design," Research Memorandum 022, Maastricht University, Graduate School of Business and Economics (GSBE).
    14. Hirofumi Kurokawa & Tomoharu Mori & Fumio Ohtake, 2016. "A Choice Experiment on Taxes: Are Income and Consumption Taxes Equivalent?," ISER Discussion Paper 0966, Institute of Social and Economic Research, Osaka University.
    15. Sausgruber, Rupert & Tyran, Jean-Robert, 2011. "Are we taxing ourselves?," Journal of Public Economics, Elsevier, vol. 95(1), pages 164-176.
    16. Tomer Blumkin & Haim Pinhas & Ro'i Zultan, 2017. "Leveraging Wage Subsidies to Facilitate Fair Wages and Increase Social Welfare," CESifo Working Paper Series 6597, CESifo.
    17. Schwirplies, Claudia & Lange, Andreas, 2024. "Posted offers with charitable promises: True preferences and strategic behavior," Games and Economic Behavior, Elsevier, vol. 146(C), pages 308-326.
    18. Blumkin, Tomer & Pinhas, Haim & Zultan, Ro’i, 2020. "Wage Subsidies and Fair Wages," European Economic Review, Elsevier, vol. 127(C).
    19. Doerrenberg, Philipp & Duncan, Denvil, 2014. "Tax Incidence in the Presence of Tax Evasion," IZA Discussion Papers 8137, Institute of Labor Economics (IZA).
    20. Huang, Lingbo & Tiezzi, Silvia & Xiao, Erte, 2022. "Tax liability side equivalence and time delayed externalities," European Journal of Political Economy, Elsevier, vol. 72(C).
    21. Kaisa Kotakorpiⓡ & Tuomas Nurminenⓡ & Topi Miettinen ⓡ & Satu Metsälampiⓡ & Kaisa Kotakorpi, 2022. "Bearing the Burden - Implications of Tax Reporting Institutions and Image Concerns on Evasion and Incidence," CESifo Working Paper Series 9791, CESifo.
    22. Kaisa Kotakorpi & Tuomas Nurminen & Topi Miettinen & Satu Metsälampi, 2022. "Bearing the burden – Implications of tax reporting institutions and image concerns on evasion and incidence," Working Papers 3, Finnish Centre of Excellence in Tax Systems Research.
    23. Tai-Sen He, 2020. "The framing effect of tax–transfer systems," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(2), pages 213-225, December.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other

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