Bossi, LucaCalcott, PaulPetkov, Vladimir2011-06-232022-07-052011-06-232022-07-0520112011https://ir.wgtn.ac.nz/handle/123456789/18595This paper studies implementation of the social optimum in a model of habit formation. We consider taxes that address inefficiencies due to negative consumption externalities, imperfect competition, and self-control problems. Our contributions are to: i) account for producers’ market power; and ii) require implementation to be robust and time consistent. Together, these features can imply significantly lower taxes. We provide a general characterization of the optimal tax rule and illustrate it with two examples.pdfen-NZdynamic externalitiesinternalitiesaddictionoptimal taxationtime consistent implementationTextwww.vuw.ac.nz/sef