Consumer Tax Production Quota Buyouts and Negative Compensation: Producers’ DilemmaReport as inadecuate




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In some cases, production quota buyouts canbe paid for through consumer taxes. Using a simplified two-period model, weshow that producers can never gain from a consumer tax buyout even if thecompensation is based on an inflated quota value. The higher the quota valueused as the basis of compensation, the greater is the overall producer lossfrom the buyout. This producer loss within a two-period model buyout is called-negative producer compensation-.

KEYWORDS

Consumer Tax Production Quota Buyout; Negative Compensation; Tobacco

Cite this paper

A. Schmitz, D. Haynes and T. Schmitz -Consumer Tax Production Quota Buyouts and Negative Compensation: Producers’ Dilemma,- Theoretical Economics Letters, Vol. 3 No. 3, 2013, pp. 156-158. doi: 10.4236-tel.2013.33025.





Author: Andrew Schmitz, Dwayne J. Haynes, Troy G. Schmitz

Source: http://www.scirp.org/



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