中级微观范里安课堂讲义-英文版(上)(上海交通大学,赵旭 朱保华).ppt

Market Equilibrium Market quantity supplied isextremely sensitive to price. S-1(q) = p*. p q p* D-1(q) = (a-q)/b Marketdemand q* =a-bp* p* = D-1(q*) = (a-q*)/b soq* = a-bp* Quantity Taxes A quantity tax levied at a rate of $t is a tax of $t paid on each unit traded. If the tax is levied on sellers then it is an excise tax. If the tax is levied on buyers then it is a sales tax. Quantity Taxes What is the effect of a quantity tax on a market’s equilibrium? How are prices affected? How is the quantity traded affected? Who pays the tax? How are gains-to-trade altered? Quantity Taxes A tax rate t makes the price paid by buyers, pb, higher by t from the price received by sellers, ps. Quantity Taxes Even with a tax the market must clear. I.e. quantity demanded by buyers at price pb must equal quantity supplied by sellers at price ps. Quantity Taxes and describe the market’s equilibrium.Notice these conditions apply nomatter if the tax is levied on sellers or onbuyers. Quantity Taxes and describe the market’s equilibrium.Notice that these two conditions apply nomatter if the tax is levied on sellers or onbuyers. Hence, a sales tax rate $t has thesame effect as an excise tax rate $t. Quantity Taxes Market Equilibrium p D(p), S(p) Marketdemand Marketsupply p* q* No tax Quantity Taxes Market Equilibrium p D(p), S(p) Marketdemand Marketsupply p* q* $t An excise tax raises the marketsupply curve by $t Quantity Taxes Market Equilibrium p D(p), S(p) Marketdemand Marketsupply p* q* An excise tax raises the marketsupply curve by $t,raises the buyers’price and lowers thequantity traded. $t pb qt Quantity Taxes Market Equilibrium p D(p), S(p) Marketdemand Marketsupply p* q* An excise tax raises the marketsupply curve by $t,raises the buyers’price and lowers thequantity traded. $t pb qt And sellers receive only ps = pb - t. ps Quantity Taxes Market Equilibrium p D(p), S(p) Marketdemand Marketsupply p* q* No tax Quantity Taxes Market Equilibrium p D(