[Introduction] Commencing with Harberger's (1962) classic paper, a number of
studies have analyzed the incidence of taxation in the context of
a deterministic, two-sector, two-factor general equilibrium model.
Recently, R. N. Batra (1975) and R. A. Ratti and P. Shame (1977a, 1977b)
have reexamined the robustness of these deterministic results for the
case in which production uncertainty is incorporated into the model.
By using "entrepreneurial" models in which the firm is assumed to
maximize the expected utility of profits, they find that the
incidence of taxes depends on the preferences and probability assessments
of the entrepreneur, and in general, the deterministic results no
longer obtain
