Tax incidence on competing two-sided platforms

Paul Belleflamme, Eric Toulemonde

Research output: Contribution to journalArticle

Abstract

We analyze the effects of various taxes on competing two-sided platforms. First, we consider nondiscriminating taxes. We show that specific taxes are entirely passed to the agents on the side on which they are levied; other agents and platforms are left unaffected. Transaction taxes hurt agents on both sides and benefit platforms. Ad valorem taxes are the only tax instrument that allows the tax authority to capture part of the platforms' profits. Second, regarding asymmetric taxes, we show that agents on the untaxed side benefit from the tax. At least one platform, possibly the taxed one, benefits from the tax.

Original languageEnglish
Pages (from-to)9-21
Number of pages13
JournalJournal of Public Economic Theory
Volume20
Issue number1
DOIs
Publication statusPublished - 1 Feb 2018

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