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Temptation in consumption and optimal taxation
Department of Economics, University of Bologna, Italy.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE).ORCID iD: 0000-0003-4145-7894
2023 (English)In: Journal of Economic Behavior and Organization, ISSN 0167-2681, E-ISSN 1879-1751, Vol. 205, p. 687-707Article in journal (Refereed) Published
Abstract [en]

This article aims to integrate temptation preferences into the theory of optimal taxation with heterogenous agents and asymmetric information. Consumers are tempted to over-consume a commodity which may lead to an over-supply of labor. Resisting this temptation implies a utility cost and any policy that reduces this cost is welfare improving. We uncover novel channels for government intervention and the interaction between the welfare improving and redistributive roles of public policy. We also identify a commitment mechanism that works through the endogenous labor choice and affects the design and effectiveness of the optimal tax policy.

Place, publisher, year, edition, pages
Elsevier, 2023. Vol. 205, p. 687-707
Keywords [en]
Commodity taxation, Income taxation, Optimal taxation, Redistribution, Self-control, Temptation
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-201995DOI: 10.1016/j.jebo.2022.10.030ISI: 000913503800001Scopus ID: 2-s2.0-85144010615OAI: oai:DiVA.org:umu-201995DiVA, id: diva2:1722548
Available from: 2022-12-29 Created: 2022-12-29 Last updated: 2024-07-02Bibliographically approved

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Sjögren, Tomas

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