Revenue equivalence and income taxation

Grimm V, Schmidt U (2000)

Publication Language: English

Publication Type: Journal article

Publication year: 2000


Publisher: Springer Verlag

Book Volume: 24

Pages Range: 56-63

Journal Issue: 1


DOI: 10.1007/BF02759695


This paper considers the classical independent private values model of auction theory in the presence of income taxation. We show that revenue equivalence remains valid if income taxes are proportional. Progressive and regressive taxes lead, in general, to asymmetries between bidders with the well-known consequence that revenue equivalence no longer holds. However, if symmetry of the bidders is maintained, progressive (regressive) income tax implies a higher (lower) expected revenue in first-price than in second-price auctions.

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How to cite


Grimm, V., & Schmidt, U. (2000). Revenue equivalence and income taxation. Journal of Economics and Finance, 24(1), 56-63.


Grimm, Veronika, and Ulrich Schmidt. "Revenue equivalence and income taxation." Journal of Economics and Finance 24.1 (2000): 56-63.

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