Vertical Integration and Production Inefficiency in the Presence of a Gross Receipts Tax /
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...
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- Elektronisch E-Book
- Sprache:
- Englisch
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Cambridge, Mass.
National Bureau of Economic Research
2021.
- Zusammenfassung:
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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.
- Umfang:
- 1 online resource: illustrations (black and white);
- Anmerkungen:
- February 2021.
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