Effects of Taxation on Consumer Goods

A Comparative Study of Cost Allocation for Essential and Non-Essential Commodities in India and the USA

Abstract

This study examines the comparative cost allocation strategies for essential and non-essential commodities in India and the USA, focusing on the economic, social, and policy-driven factors that shape pricing in these two distinct markets. Essential commodities, such as food, healthcare, and basic utilities, often experience government intervention in both countries, but the mechanisms differ significantly. In India, the government employs price controls, subsidies, and public distribution systems to ensure affordability and accessibility of essential goods, particularly for lower-income groups. In contrast, the USA relies more on market-driven forces with limited direct intervention, though programs like food assistance and Medicaid provide safety nets for disadvantaged populations.

For non-essential commodities, the cost allocation diverges further. In India, tariffs, taxes, and import duties heavily influence the price of luxury goods and imported products, while in the USA, the impact of consumer preferences and corporate pricing strategies is more pronounced, with taxes and tariffs playing a secondary role. This study compares the efficiency, sustainability, and fairness of cost allocation methods in both countries, highlighting the trade-offs between market freedom and government intervention. The research also explores the implications of these strategies for consumers, businesses, and policymakers, offering insights into how cost allocation practices impact economic inequality, market competition, and social welfare in India and the USA.

By understanding these frameworks, the study aims to contribute to the ongoing discourse on economic policy, price regulation, and sustainable consumption.