On Producer Taxation.

This article focuses on the taxation of commodity producers. A document by P.S. Dasgupta and J. Stiglitz that appeared in the January 1972 issue of "Review of Economic Studies" entitled "On Optimal Taxation and Public Production" discussed the optimum taxation of profits accruing to firms under diminishing returns of scale, and the implications for optimum commodity taxation and public production. The main theorem asserts that, when the rents of different producers can be taxed at different rates, production efficiency is desirable. This article's author, together with another econometrist, P.A. Diamond, analyzed the relationship between commodity taxation and public production. In the study, it was assumed the constant returns flowed in the private sector, and it was supposed that productive efficiency would not usually be desirable when this assumption was violated. Therefore, it is the main objective of this communication is to see how the results can be obtained using proposed methodologies.