Article citations

    Houthakker, H.S. (1952) Compensated Changes in Quantities and Qualities Consumed. The Review of Economic Studies, 19, 155-164.

has been cited by the following article:

  • TITLE: The Welfare Comparison of Ad-Valorem Tax and Specific Tax with Both Quality and Quantity Choice of a Consumer
  • AUTHORS: Takuya Obara, Shuichi Tsugawa
  • KEYWORDS: Quality Choice of a Consumer, Specific Tax, Ad-Valorem Tax, Substitution Effect, Welfare Comparison
  • JOURNAL NAME: Theoretical Economics Letters DOI: 10.4236/tel.2017.76122 Oct 26, 2017
  • ABSTRACT: This paper compares ad-valorem and specific taxation in models where a representative consumer with an exogenous income has both a quality and a quantity choice under perfect competition. In the setting, while ad-valorem tax causes income effect only, specific tax causes both income effect and substitution effect. Therefore, ad-valorem tax decreases consumer demand for both quality and quantity; on the other hand, specific tax decreases consumer demand for quantity. However, the sign of consumer demand for quality is ambiguous and is determined by the curvature of marginal utility on quantity. Additionally, using a constant elasticity of substitution (CES) utility function and a linear price function, we show that ad-valorem tax is superior to specific tax except for the Leontief preference under which the two forms of commodity taxes generate the same tax revenue. The substitution effect caused by specific tax disappears if the elasticity of substitution converges to zero.