PROPORTIONAL PROFIT TAXES AND RESOURCE MANAGEMENT UNDER PRODUCTION UNCERTAINTY

The impact of proportional profit taxes on input use is analyzed under conditions of production uncertainty and risk aversion. Two kinds of profit taxes are considered: proportional profit taxes with perfect loss offset and revenue-neutral profits taxes. Their impact on optimal input use is examined under various forms of production uncertainty, such as the Just-Pope model and the cases of multiplicative and additive uncertainty. It is shown that the structure of risk attitudes, the form of production uncertainty, the underlying (stochastic) technical interdependencies, and the risk-input relations are crucial features in determining the impact of proportional profit taxes on optimal input use.


Issue Date:
1999-12
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/30794
PURL Identifier:
http://purl.umn.edu/30794
Published in:
Journal of Agricultural and Resource Economics, Volume 24, Number 2
Page range:
525-535
Total Pages:
11




 Record created 2017-04-01, last modified 2018-01-22

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