When supply is very elastic and demand is very inelastic, consumers bear most of the tax burden.
When supply is very elastic and demand is very inelastic, consumers bear most of the tax burden?
Tax incidence depends on the relative price elasticities of supply and demand; when demand is inelastic and supply is elastic, the economic burden of a tax falls primarily on consumers as a matter of standard microeconomic theory.
Verdict: COMMON KNOWLEDGE · 0 sources for, 0 against · Last checked
The claim is a fundamental, definitional principle of microeconomic theory regarding tax incidence. Because it is a textbook economic identity following directly from definitions of elasticity and tax burden distribution, no citation of empirical papers is necessary, placing it under common knowledge.
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The claim is a fundamental, definitional principle of microeconomic theory regarding tax incidence. Because it is a textbook economic identity following directly from definitions of elasticity and tax burden distribution, no citation of empirical papers is necessary, placing it under common knowledge.
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