It is shown that rather than having a neutral (in the short run) or negative (in the long run) effect on output, a profit tax can, with joint products, increase a profit-maximizing firm's output. As counterintuitive as this result appears initially, it is a straightforward implication of joint products.
References
1.
MILLJ. S. (1965) Principles of Political Economy (AshleyW. J., ed.). New York: Augustus M. Kelly. (Original work published 1848)
