北大微观经济学课件

ChapterSixteenEquilibrium均衡ChapterSixteenEquilibrium1StructureMarketequilibriumQuantitytaxandequilibriumTaxincidence（税收分担）Deadweightloss（额外净损失）StructureMarketequilibrium2MarketEquilibriumAmarketisinequilibriumwhentotalquantitydemandedbybuyersequalstotalquantitysuppliedbysellers.Alsocalled“marketiscleared”SupplymaynotequalproductionMarketEquilibriumAmarketis3MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)MarketEquilibriumpD(p),S(p)q4MarketSettingCompetitivemarketContestablemarketMarketSettingCompetitivemark5MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*q*D(p*)=S(p*);themarket

isinequilibrium.MarketEquilibriumpD(p),S(p)q6MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*S(p’)D(p’)<S(p’);anexcess

ofquantitysuppliedover

quantitydemanded.p’D(p’)MarketEquilibriumpD(p),S(p)q7MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*S(p’)D(p’)<S(p’);anexcess

ofquantitysuppliedover

quantitydemanded.p’D(p’)Marketpricemustfalltowardsp*.MarketEquilibriumpD(p),S(p)q8MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*D(p”)D(p”)>S(p”);anexcess

ofquantitydemanded

overquantitysupplied.p”S(p”)MarketEquilibriumpD(p),S(p)q9MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*D(p”)D(p”)>S(p”);anexcess

ofquantitydemanded

overquantitysupplied.p”S(p”)Marketpricemustrisetowardsp*.MarketEquilibriumpD(p),S(p)q10MarketEquilibrium–LinearD&SAttheequilibriumpricep*,D(p*)=S(p*).

Thatis,whichgivesandMarketEquilibrium–LinearD11MarketEquilibriumpD(p),S(p)D(p)=a-bpMarket

demandMarket

supplyS(p)=c+dpMarketEquilibriumpD(p),S(p)D12MarketEquilibriumCanwecalculatethemarketequilibriumusingtheinversemarketdemandandsupplycurves?Yes,itisthesamecalculation.MarketEquilibriumCanwecalcu13MarketEquilibriumtheequationoftheinversemarket

demandcurve.Andtheequationoftheinversemarket

supplycurve.MarketEquilibriumtheequation14MarketEquilibriumqD-1(q),

S-1(q)D-1(q)=(a-q)/bMarketinverse

demandS-1(q)=(-c+q)/dp*q*Atequilibrium,

D-1(q*)=S-1(q*).MarketinversesupplyMarketEquilibriumqD-1(q),

S-115MarketEquilibriumandAttheequilibriumquantityq*,D-1(p*)=S-1(p*).

Thatis,whichgivesandMarketEquilibriumandAttheeq16MarketEquilibriumqD-1(q),

S-1(q)D-1(q)=(a-q)/bMarket

demandMarket

supplyS-1(q)=(-c+q)/dMarketEquilibriumqD-1(q),

S-117MarketEquilibriumTwospecialcases:quantitysuppliedisfixed,independentofthemarketprice,andquantitysuppliedisextremelysensitivetothemarketprice.MarketEquilibriumTwospecial18MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqq*=cMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,19MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqp*D-1(q)=(a-q)/bMarket

demandq*=cMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,20MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pq

p*=

(a-c)/bD-1(q)=(a-q)/bMarket

demandq*=cp*=D-1(q*);thatis,

p*=(a-c)/b.Marketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,21MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqD-1(q)=(a-q)/bMarket

demandq*=cp*=D-1(q*);thatis,

p*=(a-c)/b.withd=0give

p*=

(a-c)/bMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,22MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*MarketEquilibriumMarketquant23MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*D-1(q)=(a-q)/bMarket

demandq*MarketEquilibriumMarketquant24MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*D-1(q)=(a-q)/bMarket

demandq*=

a-bp*p*=D-1(q*)=(a-q*)/bso

q*=a-bp*MarketEquilibriumMarketquant25ComparativeStaticsShiftingdemandcurvesIncomePriceofotherproductsShiftingsupplycurvesTechnologyTaxesComparativeStaticsShiftingde26QuantityTaxesAquantitytaxleviedatarateof$tisataxof$tpaidoneachunittraded.Ifthetaxisleviedonsellersthenitisanexcisetax.Ifthetaxisleviedonbuyersthenitisasalestax.QuantityTaxesAquantitytaxl27QuantityTaxesWhatistheeffectofaquantitytaxonamarket’sequilibrium?Howarepricesaffected?Howisthequantitytradedaffected?Whopaysthetax?Howaregains-to-tradealtered?QuantityTaxesWhatistheeffe28QuantityTaxesAtaxratetmakesthepricepaidbybuyers,pb,higherbytfromthepricereceivedbysellers,ps.QuantityTaxesAtaxratetmak29QuantityTaxesEvenwithataxthemarketmustclear.I.e.quantitydemandedbybuyersatpricepbmustequalquantitysuppliedbysellersatpriceps.QuantityTaxesEvenwithatax30QuantityTaxesanddescribethemarket’sequilibrium.

Noticethatthesetwoconditionsapplyno

matterifthetaxisleviedonsellersoron

buyers.Hence,asalestaxrate$thasthe

sameeffectasanexcisetaxrate$t.QuantityTaxesanddescribethe31QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*NotaxQuantityTaxes&MarketEquili32QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*$tAnexcisetaxraisesthemarket

supplycurveby$tQuantityTaxes&MarketEquili33QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Anexcisetaxraisesthemarket

supplycurveby$t,

raisesthebuyers’

priceandlowersthe

quantitytraded.$tpbqtQuantityTaxes&MarketEquili34QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Anexcisetaxraisesthemarket

supplycurveby$t,

raisesthebuyers’

priceandlowersthe

quantitytraded.$tpbqtAndsellersreceiveonlyps=pb-t.psQuantityTaxes&MarketEquili35QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*NotaxQuantityTaxes&MarketEquili36QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t$tQuantityTaxes&MarketEquili37QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t,lowers

thesellers’priceand

reducesthequantity

traded.$tqtpsQuantityTaxes&MarketEquili38QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t,lowers

thesellers’priceand

reducesthequantity

traded.$tpbpbqtpbAndbuyerspaypb=ps+t.psQuantityTaxes&MarketEquili39QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Asalestaxleviedat

rate$thasthesame

effectsonthe

market’sequilibrium

asdoesanexcisetax

leviedatrate$t.$tpbpbqtpbps$tQuantityTaxes&MarketEquili40QuantityTaxes&MarketEquilibriumWhopaysthetaxof$tperunittraded?Thedivisionofthe$tbetweenbuyersandsellersistheincidenceofthetax(税收分担).QuantityTaxes&MarketEquili41QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsQuantityTaxes&MarketEquili42QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersQuantityTaxes&MarketEquili43QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

sellersQuantityTaxes&MarketEquili44QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersTaxpaidby

sellersQuantityTaxes&MarketEquili45QuantityTaxes&MarketEquilibriumE.g.supposethemarketdemandandsupplycurvesarelinear.QuantityTaxes&MarketEquili46QuantityTaxes&MarketEquilibriumandQuantityTaxes&MarketEquili47QuantityTaxes&MarketEquilibriumandWiththetax,themarketequilibriumsatisfiesandsoandQuantityTaxes&MarketEquili48QuantityTaxes&MarketEquilibriumandWiththetax,themarketequilibriumsatisfiesandsoandSubstitutingforpbgivesQuantityTaxes&MarketEquili49QuantityTaxes&MarketEquilibriumandgiveThequantitytradedatequilibriumisQuantityTaxes&MarketEquili50QuantityTaxes&MarketEquilibriumAst®0,psandpb

®

the

equilibriumpriceif

thereisnotax(t=0)andqt

thequantitytradedatequilibrium

whenthereisnotax.®QuantityTaxes&MarketEquili51QuantityTaxes&MarketEquilibriumAstincreases, psfalls, pbrises,

and qtfalls.QuantityTaxes&MarketEquili52QuantityTaxes&MarketEquilibriumThetaxpaidperunitbythebuyerisQuantityTaxes&MarketEquili53QuantityTaxes&MarketEquilibriumThetaxpaidperunitbythebuyerisThetaxpaidperunitbythesellerisQuantityTaxes&MarketEquili54QuantityTaxes&MarketEquilibriumThetotaltaxpaid(bybuyersandsellers

combined)isQuantityTaxes&MarketEquili55TaxIncidenceandOwn-PriceElasticitiesTheincidenceofaquantitytaxdependsupontheown-priceelasticitiesofdemandandsupply.TaxIncidenceandOwn-PriceEl56TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsTaxIncidenceandOwn-PriceEl57TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsChangetobuyers’

priceispb-p*.Changetoquantity

demandedisDq.DqTaxIncidenceandOwn-PriceEl58TaxIncidenceandOwn-PriceElasticitiesAroundp=p*theown-priceelasticity

ofdemandisapproximatelyTaxIncidenceandOwn-PriceEl59TaxIncidenceandOwn-PriceElasticitiesAroundp=p*theown-priceelasticity

ofdemandisapproximatelyTaxIncidenceandOwn-PriceEl60TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsTaxIncidenceandOwn-PriceEl61TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsChangetosellers’

priceisps-p*.Changetoquantity

demandedisDq.DqTaxIncidenceandOwn-PriceEl62TaxIncidenceandOwn-PriceElasticitiesAroundp=p*theown-priceelasticity

ofsupplyisapproximatelyTaxIncidenceandOwn-PriceEl63TaxIncidenceandOwn-PriceElasticitiesAroundp=p*theown-priceelasticity

ofsupplyisapproximatelyTaxIncidenceandOwn-PriceEl64TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersTaxpaidby

sellersTaxIncidenceandOwn-PriceEl65TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersTaxpaidby

sellersTaxincidence=TaxIncidenceandOwn-PriceEl66TaxIncidenceandOwn-PriceElasticitiesTaxincidence=TaxIncidenceandOwn-PriceEl67TaxIncidenceandOwn-PriceElasticitiesTaxincidence=SoTaxIncidenceandOwn-PriceEl68TaxIncidenceandOwn-PriceElasticitiesTaxincidenceisThefractionofa$tquantitytaxpaid

bybuyersrisesassupplybecomesmore

own-priceelasticorasdemandbecomes

lessown-priceelastic.TaxIncidenceandOwn-PriceEl69TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsAsmarketdemand

becomeslessown-priceelastic,taxincidenceshiftsmore

tothebuyers.

TaxIncidenceandOwn-PriceEl70TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsAsmarketdemand

becomeslessown-priceelastic,taxincidenceshiftsmore

tothebuyers.

TaxIncidenceandOwn-PriceEl71TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyps=p*$tpbqt=q*Asmarketdemand

becomeslessown-priceelastic,taxincidenceshiftsmore

tothebuyers.

TaxIncidenceandOwn-PriceEl72TaxIncidenceandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyps=p*$tpbqt=q*Asmarketdemand

becomeslessown-priceelastic,taxincidenceshiftsmore

tothebuyers.

WheneD=0,buyerspaytheentiretax,eventhoughitisleviedonthesellers.TaxIncidenceandOwn-PriceEl73TaxIncidenceandOwn-PriceElasticitiesTaxincidenceisSimilarly,thefractionofa$tquantitytaxpaidbysellersrisesassupplybecomeslessown-priceelasticorasdemandbecomesmoreown-priceelastic.TaxIncidenceandOwn-PriceEl74DeadweightLossandOwn-PriceElasticitiesAquantitytaximposedonacompetitivemarketreducesthequantitytradedandsoreducesgains-to-trade(i.e.thesumofConsumers’andProducers’Surpluses).Thelosttotalsurplusisthetax’sdeadweightloss（额外净损失）,orexcessburden.DeadweightLossandOwn-Price75DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*NotaxDeadweightLossandOwn-Price76DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*NotaxCSDeadweightLossandOwn-Price77DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*NotaxPSDeadweightLossandOwn-Price78DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*NotaxCSPSDeadweightLossandOwn-Price79DeadweightLossandOwn-PriceElasticities$tqtCSThetaxreduces

bothCSandPSpD(p),S(p)Market

demandMarket

supplyp*q*pbpsPSDeadweightLossandOwn-Price80DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsCSPSThetaxreduces

bothCSandPS,

transferssurplus

togovernmentTaxDeadweightLossandOwn-Price81DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsCSPSThetaxreduces

bothCSandPS,

transferssurplus

togovernmentTaxDeadweightLossandOwn-Price82DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsCSPSThetaxreduces

bothCSandPS,

transferssurplus

togovernmentTaxDeadweightLossandOwn-Price83DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsCSPSThetaxreduces

bothCSandPS,

transferssurplus

togovernment,

andlowerstotal

surplus.TaxDeadweightLossandOwn-Price84DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsDeadweightlossDeadweightLossandOwn-Price85DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyp*q*$tpbqtpsDeadweightlossfallsasmarketdemandbecomeslessown-priceelastic.DeadweightLossandOwn-Price86DeadweightLossandOwn-PriceElasticitiespD(p),S(p)Market

demandMarket

supplyps=p*$tpbqt=q*Deadweightlossfallsasmarketdemandbecomeslessown-priceelastic.WheneD=0,thetaxcausesnodeadweightloss.DeadweightLossandOwn-Price87DeadweightLossandOwn-PriceElasticitiesDeadweightlossduetoaquantitytaxrisesaseithermarketdemandormarketsupplybecomesmoreown-priceelastic.IfeithereD=0oreS=0thenthedeadweightlossiszero.DeadweightLossandOwn-Price88ExamplesofEquilibriumAnalysisPriceceilingMinimumpriceAgriculturalpricecontrolMinimumwageExamplesofEquilibriumAnalys89pD(p),S(p)p*q*pmaxDABCEFqSPricecontrolCS=C-EPS=-C-FDWL=-E-F+waitinginlineqDpD(p),S(p)p*q*pmaxDABCEFqSPri90pD(p),S(p)p*q*pmaxDABCEFqmaxPricecontrolwithrationingCS=C-EPS=-C-FDWL=-E-F+corruptionpD(p),S(p)p*q*pmaxDABCEFqmaxP91pD(p),S(p)p*q*psDABCEFqmaxPricefloorwithacreagecontrolPayment=E+F+GCS=-B-EPS=B-F+paymentGovernmentloss=paymentDWL=-E-FGpD(p),S(p)p*q*psDABCEFqmaxPri92MinimumWageSinglesectorsingletypeoflaborCoveredvs.uncoveredsectorSkilledvs.unskilledworkersMinimumWageSinglesectorsing93ChapterSixteenEquilibrium均衡ChapterSixteenEquilibrium94StructureMarketequilibriumQuantitytaxandequilibriumTaxincidence（税收分担）Deadweightloss（额外净损失）StructureMarketequilibrium95MarketEquilibriumAmarketisinequilibriumwhentotalquantitydemandedbybuyersequalstotalquantitysuppliedbysellers.Alsocalled“marketiscleared”SupplymaynotequalproductionMarketEquilibriumAmarketis96MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)MarketEquilibriumpD(p),S(p)q97MarketSettingCompetitivemarketContestablemarketMarketSettingCompetitivemark98MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*q*D(p*)=S(p*);themarket

isinequilibrium.MarketEquilibriumpD(p),S(p)q99MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*S(p’)D(p’)<S(p’);anexcess

ofquantitysuppliedover

quantitydemanded.p’D(p’)MarketEquilibriumpD(p),S(p)q100MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*S(p’)D(p’)<S(p’);anexcess

ofquantitysuppliedover

quantitydemanded.p’D(p’)Marketpricemustfalltowardsp*.MarketEquilibriumpD(p),S(p)q101MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*D(p”)D(p”)>S(p”);anexcess

ofquantitydemanded

overquantitysupplied.p”S(p”)MarketEquilibriumpD(p),S(p)q102MarketEquilibriumpD(p),S(p)q=D(p)Market

demandMarket

supplyq=S(p)p*D(p”)D(p”)>S(p”);anexcess

ofquantitydemanded

overquantitysupplied.p”S(p”)Marketpricemustrisetowardsp*.MarketEquilibriumpD(p),S(p)q103MarketEquilibrium–LinearD&SAttheequilibriumpricep*,D(p*)=S(p*).

Thatis,whichgivesandMarketEquilibrium–LinearD104MarketEquilibriumpD(p),S(p)D(p)=a-bpMarket

demandMarket

supplyS(p)=c+dpMarketEquilibriumpD(p),S(p)D105MarketEquilibriumCanwecalculatethemarketequilibriumusingtheinversemarketdemandandsupplycurves?Yes,itisthesamecalculation.MarketEquilibriumCanwecalcu106MarketEquilibriumtheequationoftheinversemarket

demandcurve.Andtheequationoftheinversemarket

supplycurve.MarketEquilibriumtheequation107MarketEquilibriumqD-1(q),

S-1(q)D-1(q)=(a-q)/bMarketinverse

demandS-1(q)=(-c+q)/dp*q*Atequilibrium,

D-1(q*)=S-1(q*).MarketinversesupplyMarketEquilibriumqD-1(q),

S-1108MarketEquilibriumandAttheequilibriumquantityq*,D-1(p*)=S-1(p*).

Thatis,whichgivesandMarketEquilibriumandAttheeq109MarketEquilibriumqD-1(q),

S-1(q)D-1(q)=(a-q)/bMarket

demandMarket

supplyS-1(q)=(-c+q)/dMarketEquilibriumqD-1(q),

S-1110MarketEquilibriumTwospecialcases:quantitysuppliedisfixed,independentofthemarketprice,andquantitysuppliedisextremelysensitivetothemarketprice.MarketEquilibriumTwospecial111MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqq*=cMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,112MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqp*D-1(q)=(a-q)/bMarket

demandq*=cMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,113MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pq

p*=

(a-c)/bD-1(q)=(a-q)/bMarket

demandq*=cp*=D-1(q*);thatis,

p*=(a-c)/b.Marketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,114MarketEquilibriumS(p)=c+dp,sod=0andS(p)ºc.pqD-1(q)=(a-q)/bMarket

demandq*=cp*=D-1(q*);thatis,

p*=(a-c)/b.withd=0give

p*=

(a-c)/bMarketquantitysuppliedis

fixed,independentofprice.MarketEquilibriumS(p)=c+dp,115MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*MarketEquilibriumMarketquant116MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*D-1(q)=(a-q)/bMarket

demandq*MarketEquilibriumMarketquant117MarketEquilibriumMarketquantitysuppliedis

extremelysensitivetoprice.S-1(q)=p*.pqp*D-1(q)=(a-q)/bMarket

demandq*=

a-bp*p*=D-1(q*)=(a-q*)/bso

q*=a-bp*MarketEquilibriumMarketquant118ComparativeStaticsShiftingdemandcurvesIncomePriceofotherproductsShiftingsupplycurvesTechnologyTaxesComparativeStaticsShiftingde119QuantityTaxesAquantitytaxleviedatarateof$tisataxof$tpaidoneachunittraded.Ifthetaxisleviedonsellersthenitisanexcisetax.Ifthetaxisleviedonbuyersthenitisasalestax.QuantityTaxesAquantitytaxl120QuantityTaxesWhatistheeffectofaquantitytaxonamarket’sequilibrium?Howarepricesaffected?Howisthequantitytradedaffected?Whopaysthetax?Howaregains-to-tradealtered?QuantityTaxesWhatistheeffe121QuantityTaxesAtaxratetmakesthepricepaidbybuyers,pb,higherbytfromthepricereceivedbysellers,ps.QuantityTaxesAtaxratetmak122QuantityTaxesEvenwithataxthemarketmustclear.I.e.quantitydemandedbybuyersatpricepbmustequalquantitysuppliedbysellersatpriceps.QuantityTaxesEvenwithatax123QuantityTaxesanddescribethemarket’sequilibrium.

Noticethatthesetwoconditionsapplyno

matterifthetaxisleviedonsellersoron

buyers.Hence,asalestaxrate$thasthe

sameeffectasanexcisetaxrate$t.QuantityTaxesanddescribethe124QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*NotaxQuantityTaxes&MarketEquili125QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*$tAnexcisetaxraisesthemarket

supplycurveby$tQuantityTaxes&MarketEquili126QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Anexcisetaxraisesthemarket

supplycurveby$t,

raisesthebuyers’

priceandlowersthe

quantitytraded.$tpbqtQuantityTaxes&MarketEquili127QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Anexcisetaxraisesthemarket

supplycurveby$t,

raisesthebuyers’

priceandlowersthe

quantitytraded.$tpbqtAndsellersreceiveonlyps=pb-t.psQuantityTaxes&MarketEquili128QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*NotaxQuantityTaxes&MarketEquili129QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t$tQuantityTaxes&MarketEquili130QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t,lowers

thesellers’priceand

reducesthequantity

traded.$tqtpsQuantityTaxes&MarketEquili131QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Ansalestaxlowers

themarketdemand

curveby$t,lowers

thesellers’priceand

reducesthequantity

traded.$tpbpbqtpbAndbuyerspaypb=ps+t.psQuantityTaxes&MarketEquili132QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*Asalestaxleviedat

rate$thasthesame

effectsonthe

market’sequilibrium

asdoesanexcisetax

leviedatrate$t.$tpbpbqtpbps$tQuantityTaxes&MarketEquili133QuantityTaxes&MarketEquilibriumWhopaysthetaxof$tperunittraded?Thedivisionofthe$tbetweenbuyersandsellersistheincidenceofthetax(税收分担).QuantityTaxes&MarketEquili134QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsQuantityTaxes&MarketEquili135QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersQuantityTaxes&MarketEquili136QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

sellersQuantityTaxes&MarketEquili137QuantityTaxes&MarketEquilibriumpD(p),S(p)Market

demandMarket

supplyp*q*pbpbqtpbpsTaxpaidby

buyersTaxpaidby

sellersQuantityTaxes&MarketEquili138QuantityTaxes&MarketEquilibriumE.g.supposethemarketdemandandsupplycurvesarelinear.QuantityTaxes&MarketEquili139QuantityTaxes&MarketEquilibriumandQuantityTaxes&MarketEquili140QuantityTaxes&MarketEquilibriumandWiththetax,themarketequilibriumsatisfiesandsoandQuantityTaxes&MarketEquili141QuantityTaxes&MarketEquilibriumandWiththetax,themarketequilibriumsatisfiesandsoandSubstitutingforpbgivesQuantityTaxes&MarketEquili142QuantityTaxes&MarketEquilibriumandgiveThequantitytradedatequilibriumisQuantityTaxes&MarketEquili143QuantityTaxes&MarketEquilibriumAst®0,psandpb

®

the

equilibriumpriceif

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