Consumer Tax Production Quota Buyouts and Negative Compensation: Producers’ Dilemma

HTML  XML Download Download as PDF (Size: 353KB)  PP. 156-158  
DOI: 10.4236/tel.2013.33025    3,661 Downloads   5,601 Views  Citations

ABSTRACT

In some cases, production quota buyouts can be paid for through consumer taxes. Using a simplified two-period model, we show that producers can never gain from a consumer tax buyout even if the compensation is based on an inflated quota value. The higher the quota value used as the basis of compensation, the greater is the overall producer loss from the buyout. This producer loss within a two-period model buyout is called “negative producer compensation”.

Share and Cite:

A. Schmitz, D. Haynes and T. Schmitz, "Consumer Tax Production Quota Buyouts and Negative Compensation: Producers’ Dilemma," Theoretical Economics Letters, Vol. 3 No. 3, 2013, pp. 156-158. doi: 10.4236/tel.2013.33025.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.