Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2008/1: Efficiency Enhancing Taxation in Two-sided Markets

Hans Jarle Kind (), Marko Koethenbuerger () and Guttorm Schjelderup ()
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Hans Jarle Kind: Department of Economics, Norwegian School of Economics and Business Administration (NHH), Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Marko Koethenbuerger: Center for Economic Studies, Ludwig-Maximilians-Universit├Ąt, Postal: NHH , Ludwig-Maximilians-Universit├Ąt , Center for Economic Studies , Schackstr. 4, 80539 Munich, Germany
Guttorm Schjelderup: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: This paper examines the efficient provision of goods in two-sided markets and characterizes optimal specific and ad-valorem taxes. We show that (i) a monopoly may have too high output compared to the social optimum; (ii) output may be reduced by imposing negative value-added taxes (subsidy) or positive specific taxes.

Keywords: Market Structure and Pricing; Efficiency; Optimal Taxation; Incidence

JEL-codes: D40; D43; H21; H22; L13

15 pages, January 25, 2008

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