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Vertical Integration and Production Inefficiency in the Presence of a Gross Receipts Tax / Benjamin Hansen, Keaton S. Miller, Caroline Weber.
- Format:
- Book
- Author/Creator:
- Hansen, Benjamin.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w28478.
- NBER working paper series no. w28478
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2021.
- Summary:
- We quantify the effects of a gross receipts tax (GRT) on vertical integration for the first time. We use data from the Washington state recreational cannabis industry, which has numerous advantages including a clean natural experiment: a 25% GRT imposed on cannabis firms was subsequently replaced by an excise tax at retail. We find the short-run elasticity of vertical integration with respect to the intermediate good net- of-tax rate is -0.15 and the long-run elasticity is more than twice as large. We find these incentives lead to large output losses - production increases by 23 percent when the GRT is eliminated.
- Notes:
- Print version record
- February 2021.
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