Munich Personal RePEc Archive

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.


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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.

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