Journal article
The Impact of Including, Adding, and Subtracting a Tax on Demand
Abstract
We test the equivalence of tax-inclusive, tax-exclusive and tax-rebate prices through a series of experiments differing only in their handling of the tax. Subjects receive a cash budget and decide how much to keep and how much to spend on various attractively priced goods. Subjects spend significantly more under tax-exclusive prices whereas total purchases under tax-inclusive and tax-rebate prices are similar. These results persist throughout …
Authors
Feldman NE; Ruffle BJ
Journal
American Economic Journal Economic Policy, Vol. 7, No. 1, pp. 95–118
Publisher
American Economic Association
Publication Date
February 1, 2015
DOI
10.1257/pol.20130101
ISSN
1945-7731