The Optimal Taxation of Network Goods

Hargaden, Enda and Hanson, Andrew and Harris, Matthew (2023): The Optimal Taxation of Network Goods.

Abstract

We derive optimal tax formulas for network goods. The solution trades-off contemporaneous revenue collection against the discounted future flows of reduced network growth. We provide conditions under which the optimal tax sequence is time-invariant, and show that the rates should in general change over time. A quantitative model with consumer heterogeneity highlights patterns in these optimal sequences, and underscores the equity trade-offs

• Item Type: MPRA Paper
• Language: English
• Keywords: Public Finance, Optimal taxation, network goods, consumption externalities, atmospheric externalities.
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies

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