Time horizon:
Short run Long run
Short-run versus long-run tax incidence: producer burden first, consumer burden later Short-Run Effects Quantity Price ($) DSR SSR SSRtax Tax = 2 QSR Q0 PSR,b P0 PSR,s Short- and Long-Run Effects Quantity Price ($) Q0 P0 larger ΔQ DSR SSR SSRtax Tax QSR PSR,b DLR SLR SLRtax Tax QLR PLR,b Short run: buyer +0.67 · seller −1.33 · quantity barely falls Stuck producer resources bear most of the tax.