Re: [tlug] Tlug Digest, Vol 44, Issue 24

[Raedwolf Summoner <raroofu@example.com>]

Stephen J. Turnbull writes:

> In general, imposition of the VAT changes the most profitable price.

Agreed. This is precisely why I alluded to the concept of ideal gas laws and perfect gases.

> Price will remain constant only if it's been nailed to the wall
> (technically, when demand is perfectly elastic).

And elasticity itself is not rigid. It is continuously changing due to external factors.

My problem with any of the formulae to describe what happens is that they cannot possibly take into account the complexity of the situation. It is entirely possible, even probable, that a VAT tax will cost the company more than 100% of the tax and cost the consumer a considerable amount as well. Even the concept of "the company" is misleading, as different companies, even in the same business, will see different results. As you are obviously well aware, it is nowhere near a simple problem of who pays what portion of "the tax" because it is not a one-time fee on a single item.

For a charming, if dated, essay on complexity, may I refer you to "I, Pencil"?
http://www.econlib.org/library/Essays/rdPncl1.html

--Ralph

P.S. I hope you guys enjoyed your linux get-together as much as I am enjoying hanging out in the Rockies, playing pool, drinking tequila, and listening to raucous Mexican music. I hope to attend one of your soirees after returning to Japan when school starts back up.

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