Efficiency and Incidence of Taxation with Free Entry and Love-of-Variety Preferences

This paper extends and replaces a previously-circulated 2017 working paper by the same authors titled “Quantifying the welfare gains of variety: A sufficient statistics approach.” We thank Simon Anderson, Raj Chetty, Julie Cullen, Amy Finkelstein, Nathan Hendren, Louis Kaplow, Henrik Kleven, Nicholas Li, Jesse Shapiro, Rob Porter, Aviv Nevo, Stephen Coate, and numerous seminar participants for helpful comments. We thank Eileen Driscoll, Robert French, Adam Miettinen, Boriana Miloucheva, Pinchuan Ong, Shahar Rotberg, Marc-Antoine Schmidt, Stephen Tino, Jessica Wagner, Ting Wang, and Haiyue Yu for extremely valuable research assistance. We gratefully acknowledge funding from the Social Sciences and Humanities Research Council (SSHRC). Any opinion, findings, and conclusions or recommendations expressed in this material are those of the authors(s) and do not necessarily reflect the views of the SSHRC. This research is based in part on data from The Nielsen Company (US), LLC and marketing databases provided through the Nielsen Datasets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from the Nielsen data are those of the researchers and do not reflect the views of Nielsen. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• data appendix

• May 19, 2021