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Optimal excise taxation: theoretical analysis, empirical estimation, and policy recommendations with tax-collection and environmental implications

19th National Competition for Economic Research Grants

Applied Economics

Senior Researcher : Miguel Ángel Borrella Mas

Research Centre or Institution : Universidad de Navarra. Pamplona.


In the proposal that we prepared for the project application, we asked what rules allow us todesign an optimal tax structure through which to achieve certain objectives (maximizing tax collection, to discourage the consumption of goods that exert negative externalities, ...) while minimizing at the same time market distortions. The analysis of this optimal tax structure has traditionally been studied in economics from a theoretical perspective, but the advance in the availability of quality data has made it possible to incorporate into the debate the most rigorous empirical testing of these previously formulated theoretical hypotheses.

In this way, our research project aimed to combine theoretical and empirical modeling techniques frequently used in the economics literature —such as oligopoly theory, microeconomic modeling, panel data, or structural (econometric) estimation— in order to develop a series of works with a twofold purpose. On the one hand, the dissemination of knowledge and results through publications in top economics journals with high recognized international prestige. On the other hand, to inform about the design and implementation of an optimal fiscal policy that maximizes the government's objective while minimizing market distortions.

Our main result so far is the (recent) publication of the paper “The Heterogeneous Tax Passthrough under Different Vertical Relationships” in the prestigious journal The Economic Journal. In this paper, we study the role played by the vertical market structure on the fiscal incidence. Using a confidential dataset of gas station contracts with a major Spanish refiner, in combination with their retail fuel prices and characteristics, we document that the passthrough of a tax onto prices is about 38 percent higher in vertically-integrated gas stations than in independent ones. This issue is of particular relevance given the increasing number of industries dominated by global firms, as these firms can enter local markets using different (vertical) contractual relationship with retailers.


Scientific Production
Magazine Articles 1
Communications at national conferences 3
Communications at international conferences 3


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