Bases Quote by William Vickrey
“Firms would be given initial entitlements to gross markup on the basis of past performance, adjusted by changes in labor and capital inputs. This is somewhat similar to the definition of normal profits under some versions of the wartime excess -profits tax. Entitlements would be transferable and a competitive market established.”
About This Quote
Source Paper: Economic Theory of Taxation, 1975
A proposal to allocate firms' right to earn excess profits based on historical performance, modified for input changes, and allow trading of those rights in a market.
In simple terms: Give firms tradable profit rights tied to past performance and input shifts.
Key Takeaway
Use market mechanisms to distribute and reallocate profit entitlements.
Themes
tax policy
market design
profit allocation
Mood
analytical
critical
policy‑oriented
Type
theoretical
economic
regulatory
When to use this quote
- industrial regulation
- corporate finance
- policy design
- tax reform
Key Concepts
normal profit
excess‑profit tax
tradeable rights
Questions to Reflect On
- How would transferable profit rights affect innovation?
- What safeguards prevent market manipulation?
A Different Perspective
May create incentives for rent‑seeking and reduce competition if not carefully regulated.
