When supply is perfectly inelastic all the tax is borne by producers, consumers bear no burden of the tax whatsoever and the market price remains unaffected. All of the lost producers' surplus is captured in the form of tax revenue, so there is no deadweight loss.

    The largest burden of any tax is borne by that segment of the market that is most inelastic. When demand or supply is inelastic it means that the buyers or sellers have no good alternatives and so must buy or sell almost the same quantities whatever the market price might be.

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