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Tax incidence on competing two‐sided platforms
Author(s) -
Belleflamme Paul,
Toulemonde Eric
Publication year - 2018
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12275
Subject(s) - database transaction , economics , tax deferral , tax incidence , ad valorem tax , microeconomics , transaction cost , monetary economics , public economics , business , tax reform , state income tax , computer science , database , gross income
We analyze the effects of various taxes on competing two‐sided platforms. First, we consider nondiscriminating taxes. We show that specific taxes are entirely passed to the agents on the side on which they are levied; other agents and platforms are left unaffected. Transaction taxes hurt agents on both sides and benefit platforms. Ad valorem taxes are the only tax instrument that allows the tax authority to capture part of the platforms' profits. Second, regarding asymmetric taxes, we show that agents on the untaxed side benefit from the tax. At least one platform, possibly the taxed one, benefits from the tax.