NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pigouvian Taxation with Administrative Costs

A. Mitchell Polinsky, Steven Shavell

NBER Working Paper No. 742 (Also Reprint No. r0480)
Issued in April 1984
NBER Program(s):   LE

This paper examines how the optimal Pigouvian tax should be adjusted to reflect administrative costs. Several cases are examined, depending on whether the administrative costs are fixed per firm taxed or are a function of the amount of tax collected, and on whether such costs are borne by the government or by the taxed firm. In some cases, the presence of administrative costs increases the optimal tax above the external cost, while in other cases it leads to a decrease in the tax.

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Published: Polinsky, A. Mitchell and Shavell, Steven. "Pigouvian Taxation with Administrative Costs." Journal of Public Economics, Vol. 19, No. 3 (December 1982) , pp. 385-394.

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