Description
Return both net prices and slope = -firstNetPrice/secondNetPrice.
Policy wedges and boundary checks depend on supplied tax, subsidy and floor conventions. A local difference or triangle approximation can describe the stated model without establishing the actual rule, incidence or full welfare effect.
Return both net prices and slope = -firstNetPrice/secondNetPrice.
When to use this tool
Use Net Tax Budget Line Slope when checking a supplied economic-policy contribution or comparison.
How to use the tool and how it works
- Enter firstPrice, secondPrice, firstTax, secondTax. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read slope, firstNetPrice, secondNetPrice. Use the output convention below.
Require positive firstPrice+firstTax and secondPrice+secondTax. Return both net prices and slope = -firstNetPrice/secondNetPrice.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| firstPrice | First Price | Required. Finite number. |
| secondPrice | Second Price | Required. Finite number. |
| firstTax | First Tax | Required. Finite number. |
| secondTax | Second Tax | Required. Finite number. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| slope | Slope | Required. Finite number. |
| firstNetPrice | First Net Price | Required. Finite number. |
| secondNetPrice | Second Net Price | Required. Finite number. |
{
"input": {
"firstPrice": 2,
"secondPrice": 4,
"firstTax": 1,
"secondTax": 2
},
"output": {
"slope": -0.5,
"firstNetPrice": 3,
"secondNetPrice": 6
}
}Limitations and assumptions
- Taxes are signed per-unit additions, not percentage rates. This is the second-good-versus-first-good budget-line slope, not tax incidence or legal tax treatment.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Consult the actual policy and a suitable complete equilibrium and welfare analysis before interpreting a local term as a policy outcome.
References
Similar or alternative tools
- Deadweight Loss Triangle Small Tax
loss = taxPerUnit*quantityReduction/2, in currency when the quantity basis matches.
- Marginal Rate Wedge
observedWedge = firstMarginalRate-secondMarginalRate; unexplainedWedge subtracts suppliedTaxWedge.