February 28, 2014 Leave a comment
On Friday 28th February, CCP stalwarts Anna Rita Bennato (CCP) and Franco Mariuzzo (CCP, ECO) present their research at the Spring seminar series. They will be presenting their research on ‘Differentiated Taxation in Imperfectly Competitive Markets. Evidence from the Irish Automobile Industry‘, which they have undertaken alongside Paul Walsh (University College Dublin). An abstract for their seminar can be found below.
Vehicle Registration Tax (VRT) is an ad-valorem tax charged on the registration of all new cars in Ireland, which is differentiated according to the engine size of a car. Accounting for this type of taxation we develop a simple theoretical model looking at the interaction of the taxation system with the product quality in an oligopolistic market. In particular, we study its incidence on producers and consumers, and using a panel dataset on new cars sold in Ireland for the period 2004-2008, we test our predictions estimating the primitives of demand and pricing. Then, a counterfactual simulation is used to numerically assess the impact of a differentiated ad-valorem taxation and the possibility of tax over-shifting. We show how a low degree of market power yields a higher incidence of taxation on consumers buying low-quality products.
The seminar takes place from 13:00-14:00 in the Thomas Paine Study Centre, Room 0.1.