Quote:
Originally Posted by Frequitude
No it is not. A $10 ticket tax is effectively $10/ticket the Flames will have to take out of their future pockets to repay the lender. It's not like it'll be $10 on top of what supply and demand will dictate the price to be. The price will be the price. The Flames will then have to forgoe $10 of that price and give it to someone else instead of themselves. Once again, it's not like the cost of tickets will be $10 cheaper if there were no ticket tax.
The burden of the ticket tax falls on the Flames. They are effectively borrowing money against their future cash flows.
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Not true because the price of tickets are not at the clearing price for equilibrium. If they were there wouldn't be a secondary market for scalpers because the tickets would be set at the market price.
In this sense where demand for tickets exceeds supply at the current price then you can confidently assume that the flames well simply increase ticket prices by the tax value with no associative reduction along the demand curve.
Fundamentally what the tax doors is to remove consumer surplus and transfer that benefit to the flames.