Tax Incidence on Competing Two-Sided Platforms: Lucky Break or Double Jeopardy
28 Pages Posted: 9 Jun 2016
There are 2 versions of this paper
Tax Incidence on Competing Two-Sided Platforms: Lucky Break or Double Jeopardy
CESifo Working Paper Series No. 5882
Number of pages: 28
Posted: 09 May 2016
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Date Written: May 2016
Abstract
We consider the effects of taxes for competing two-sided platforms. We first detail how a platform passes a tax increase on its prices. Adding price competition, we study next how the tax affects profits. Because of the strategic implications of the cross-side external effects, the tax increase may end up increasing the profit of the taxed platform (lucky break) or, conversely, reducing it twice (double jeopardy).
Keywords: two-sided platforms, taxation, pass-through
JEL Classification: D430, L130, L860, O320
Suggested Citation: Suggested Citation
Belleflamme, Paul and Toulemonde, Eric, Tax Incidence on Competing Two-Sided Platforms: Lucky Break or Double Jeopardy (May 2016). CESifo Working Paper Series No. 5882, Available at SSRN: https://ssrn.com/abstract=2791364 or http://dx.doi.org/10.2139/ssrn.2791364
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