Journal of Economic Perspectives: Vol. 13 No. 2 (Spring 1999)
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Three Sides of Harberger Triangles
Hines, James R. 1999. "Three Sides of Harberger Triangles." Journal of Economic Perspectives, 13(2): 167-188.
Harberger triangles are used to calculate the efficiency costs of taxes, government regulations, monopolistic practices, and various other market distortions. This paper considers the historical development of Harberger triangles, the associated theoretical controversies, and the contribution of Harberger triangles to subsequent empirical work and theories of market imperfections. Prior to the publication of Arnold Harberger's papers, economists very rarely estimated deadweight losses. The empirical deadweight loss literature expanded greatly since the 1960s, making such estimation now quite common. Meanwhile, critical evaluation of deadweight loss estimates led to new theories of rent-seeking and other inefficiencies of economies with multiple distortions.
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Hines, James R. (U MI Business School and NBER)
H21: Taxation and Subsidies: Efficiency; Optimal Taxation
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