Océane Piétri*, Pavel Molchanov**

Séminaires internes
phd seminar

Océane Piétri*, Pavel Molchanov**

AMSE
Distributional effects of tax composition changes*
Monopolistic competition under capacity constraints**
Co-écrit avec
Frédéric Dufourt, Lisa Kerdelhué*
Lieu

IBD Salle 16

Îlot Bernard du Bois - Salle 16

AMU - AMSE
5-9 boulevard Maurice Bourdet
13001 Marseille

Date(s)
Mardi 24 avril 2018| 12:30 - 14:00
Contact(s)

Edward Levavasseur : edward.levavasseur[at]univ-amu.fr
Océane Piétri : oceane.pietri[at]univ-amu.fr
Morgan Raux : morgan.raux[at]univ-amu.fr

Résumé

*Several countries have recently engaged into tax structure reforms aiming to improve economic efficiency. While the aggregate effects of these reforms are generally well understood, their redistributive impacts are mostly overlooked. This paper analyses the consequences of tax composition changes on aggregate variables, wealth distribution and inequality using different levels of heterogeneous agents model with idiosyncratic shocks. Following a recent policy experiment in France, we examine in more details the effects of introducing a generalized social security tax rate - a social security contribution (CSG) - levied on virtually all sources of income, including capital income, in order to finance a budget-neutral reduction in the labour income tax rate. The results suggest that such policy leads in the long run to a shift of wealth distribution to the left and an increase in poverty. We observe an increase in inequality in the short run and a decrease in the long run, suggesting that the poorest are the first affected by the policy tax change.

**In models of monopolistic competition it is usually assumed that the equilibrium is static and firms can perfectly predict the aggregate market outcome, which allows them to command optimal prices. Relaxing such assumption, the current work introduces information imperfection into a model of monopolistic competition a la (Melitz, 2003) with heterogeneous firms and CES preferences. More specifically, while individual productivity vary across firms, a common productivity (input prices) in the industry is allowed to fluctuate. This generates a source of uncertainty because each firm's individual demand is affected by actions of others. Firms are assumed to operate under capacity constraints: the output has to be decided prior to the price setting. Moreover, each firm can invest into a signal extraction problem, which allows it to better predict the realization of the common productivity. Firstly, I find that firms display positive assortative matching: more productive firms invest more in the signal extraction problem. As a result, larger firms have higher market power and are able to set up higher markups compared to smaller firms, even under CES preferences. Secondly, when the industry experiences an unanticipated fall in the common productivity (a crisis), smaller firms are more susceptible and change prices and markups by a higher degree relative to more productive firms. Finally, I discuss the role of information imperfection in a model which combines monopolistic competition and oligopoly.