Time horizon:
Short run Long run
Short-run versus long-run tax incidence: steep curves shift more of the tax onto price; flat curves shift more of it onto quantity Short-Run Effects Quantity Price ($) DSR S SSR Tax QSR Q0 PSR P0 Short- and Long-Run Effects Quantity Price ($) Q0 P0 larger ΔQ DSR SSR SSRtax Tax QSR PSRtax DLR SLR SLRtax Tax QLR PLRtax Short run: supply steep (resources stuck) · price rises a lot · quantity barely falls The tax lands on immobile producers — their peanut-specific land and equipment lose value.