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Taxation by Auction: Fund-Raising by 19th Century Indian Guilds

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Abstract

We describe a unique institution used by 19th century Indian guilds to raise funds: The guild members agreed that on a particular day all but one of their shops would be shut. An auction would be held to determine which one shop would remain open, and the winning bid would go to the guild funds. We compare this "taxation by auction" mechanism with more conventional tax schemes and show that under certain conditions, not only will a majority of the guild members prefer to be taxed via an auction, but that this form of taxation will be more equitable than other forms.

Suggested Citation

  • Arijit Sen & Anand V. Swamy, 2000. "Taxation by Auction: Fund-Raising by 19th Century Indian Guilds," Department of Economics Working Papers 2000-11, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2000-11
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    More about this item

    Keywords

    Auctions; Fund-Raising; Indian Guilds; Taxation;
    All these keywords.

    JEL classification:

    • N85 - Economic History - - Micro-Business History - - - Asia including Middle East
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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