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Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics, Vol 20, No 1 (1978), Pagination: 75-86
Abstract
Common teaching practice and test explanation, especially at the introductory course level, is to graphically show a commodity tax as only partially shifted forward to buyers in the form of higher price, with the non-shifted portion of the tax borne by the sellers.' The basic error in this presentation is omission of long-run adjustments that cause selling price to eventually increase by essentially the absolute amount of the tax.