Ramsey's principle of optimal taxation
Ramsey's principle of optimal taxation states that the optimal tax rate on an activity should be inversely proportional to the price-elasticity of that activity (this is obtained by summing up the price-elasticity of demand and the price-elasticity of supply).
See also
External links
- Optimal Taxation in Theory and Practice by N. Gregory Mankiw, Matthew Weinzierl, and Danny Yagan