Consumer Tax Production Quota Buyouts and Negative Compensation: Producers’ Dilemma ()
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.
Conflicts of Interest
The authors declare no conflicts of interest.
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