Optimal Commodity Taxation and Redistribution within Households

Olivier Bargain (1, 2, 3) , Olivier Donni (4)

1 GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille
2 IZA
3 CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development
4 THEMA - Théorie économique, modélisation et applications

Using a collective model of consumption, we characterize optimal commodity taxes aimed at targeting specific individuals within the household. The main message is that distortionary indirect taxation can circumvent the agency problem of the household. Essentially, taxation should discourage less the consumption of a certain group of goods: those for which the slope of the Engel curves is larger for the targeted person.

Keywords: Economie quantitative

Domains: Humanities and Social Sciences; Humanities and Social Sciences; Economics and Finance

Olivier Bargain, Olivier Donni. Optimal Commodity Taxation and Redistribution within Households. Economica, 2014, 81 (321), pp.48-62. ⟨10.1111/ecca.12055⟩. ⟨hal-01474245⟩