Potential Theft as an Indirect Tax

Cebula, Richard and Gatons, Paul (1973): Potential Theft as an Indirect Tax. Published in: Public Choice , Vol. 20, No. 1 (1 March 1974): pp. 109-111.

Abstract

This theoretical model demonstrates that there is an excess burden from potential theft similar to that which results from an indirect tax with some positive probability of payment. In addition, the model shows that potential theft creates a bias for consumption to drift away from "steal-able" items to substitute items.

• Item Type: MPRA Paper
• Language: English
• Keywords: risk aversion; indirect taxation; property crime
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies

References

Musgrave, Richard. (1959). The Theory of Public Finance, New York: McGraw-Hill.

Tullock, Gordon. (1967). "The Welfare Costs of Tariffs, Monopolies, and Theft," Western Economic Journal,5(3): 224-232.