The Effects of Excise Taxes on Non-Homogeneous Populations

In this paper we reconsider the issue of excise tax effects on elements such as who bears the excise tax burden, tax effectiveness, and tax efficiency. Usually these issues are discussed under an implicit assumption of homogeneous populations with identical demand curves for all customers. However, most populations are not homogeneous in income and tastes, and our goal is to compare the results for homogenous populations with the parallel results of a heterogeneous population with rectangularly distributed demand curves. The results of the analysis add another dimension to the often-discussed conflict between efficiency, fairness, and equality of the tax system.