Template-Type: ReDIF-Paper 1.0
Author-Name:  Nathaniel T. Wilcox
Author-X-Name-First: Nathaniel
Author-X-Name-Last: Wilcox
Author-Email:  nwilcox@mail.uh.edu
Author-Workplace-Name: Department of Economics, University of Houston
Author-Name:  Mark V. Van Boening	
Author-X-Name-First: Mark
Author-X-Name-Last: Van Boening
Author-Workplace-Name: University of Mississippi
Title:  Distribution and Dynamics in a Simple Tax Regime Transition
Abstract: We examine transitions between excise tax and license fee regimes in the laboratory. The regimes
have matched equilibrium Marshallian surplus, but license fees generate more tax revenue. The
license fees are large “avoidable costs,” known to hamper competitive equilibrium convergence.
With moderately experienced subjects, the prolonged transition to the license fee equilibrium has
these features: (1) Prices below equilibrium levels, resulting in firm losses; (2) Marshallian surplus
above equilibrium levels; and (3) transitional windfalls for the tax authority. With highly
experienced subjects, license fees lead to the instability and lower seller profits and efficiency
observed in past avoidable cost markets.
Length:  31 pages
Creation-Date:  2003-03
File-URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2003-02.pdf
File-Format: Application/pdf
Number: 2003-02
Classification-C9, H2
Keywords: Tax Regime Transitions, Avoidable Costs, Double Auctions, Experimental Methods.
Handle: RePEc:hou:wpaper:2003-02