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Uncertainty and the Theory of Tax Incidence in a Stock Market Economy

Baron, David P. and Forsythe, Robert (1981) Uncertainty and the Theory of Tax Incidence in a Stock Market Economy. Social Science Working Paper, 259. California Institute of Technology , Pasadena, CA.

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[Introduction] Commencing with Harberger's (1962) classic paper, a number of studies have analyzed the incidence of taxation in the context of a deterministic, two-sector, two-factor general equilibrium model. Recently, R. N. Batra (1975) and R. A. Ratti and P. Shame (1977a, 1977b) have reexamined the robustness of these deterministic results for the case in which production uncertainty is incorporated into the model. By using "entrepreneurial" models in which the firm is assumed to maximize the expected utility of profits, they find that the incidence of taxes depends on the preferences and probability assessments of the entrepreneur, and in general, the deterministic results no longer obtain.

Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription ItemLater version published in International Economic Review
Additional Information:Revised. Originally dated to April 1979. Published as Baron, David P., and Robert Forsythe. "Uncertainty and the theory of tax incidence in a stock market economy." International Economic Review (1981): 567-576.
Group:Social Science Working Papers
Subject Keywords:Business structures, Economic uncertainty, Securities markets, Tax incidence, Determinism, Taxes, Market prices, Economic models, Shareholders, Market equilibrium
Series Name:Social Science Working Paper
Issue or Number:259
Record Number:CaltechAUTHORS:20171017-153114575
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82433
Deposited By: Jacquelyn Bussone
Deposited On:18 Oct 2017 22:41
Last Modified:03 Oct 2019 18:54

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