TAX ON PRICE - A COMMENT

Tax bases, including the recently rediscovered price tax, which would induce a monopolist to raise output have been discussed in the literat ure for over sixty years. The earliest contributors fully appreciated the practical limitations of such devices. In addition, it is shown he re that even under ideal conditions, the requirement that the firm doe s not incur a loss severely limits the potential benefits from efficie ncy-enhancing taxes.