lets look at what you are talking about incidence
of tax incidence of tax what is incidence
of tax is simply its economic jargon to say
who pays the tax ok so we can talk about it
in two different sense one in legal sense
or statutory sense 
and second we can talk about in economic or
real sense
incidence of tax is very simple when we are
talking about the legal scenario the statutory
scenario what we say simply is the agent in
our case buyer or seller legally responsible
to pay the tax ok illegal sense he pays the
tax its very simple no definition he pays
the tax but what happens in the economics
sense the agent who bears the actual burden
of the tax 
ok and these two are different
here just we saw in this particular case we
are talking about whether it is imposed on
buyer or on seller the tax would be shared
by both of them lets look at it just for example
earlier they were buying and selling four
units at price of six
six
six unit per per unit of good now after the
imposition of tax whether it was imposed on
seller or on buyer that is immaterial ok what
happen seller in the new scenario seller gets
five unit while buyer gets
ah buyer has to
buyer has to pay
seven
seven unit
seven unit
so who is paying the tax
ah seller buyer buyer
buyer or seller or both
both
both see see now whats happening now three
units are being bought and sold in the market
ok three units are being bought and sold in
the market fine and earlier sellers were getting
six unit for one good one quantity of good
now how much seller is getting
five
five so there is decrease one unit per quantity
ok seller is no longer getting six seller
is getting five per unit earlier buyer was
paying six per unit now buyer is paying seven
per unit so buyer has to pay one unit more
and seller receives one unit less and this
the difference of two unit that goes to the
government
so in this case i would say buyers and sellers
they are equally sharing the tax it doesnt
always happen that they both equally share
the tax but in this case its happening they
both equally share the tax to answer your
question that you say why we care thats if
tax has to be imposed it should be imposed
on the other party not on us if we consider
ourself buyer we hope that tax is imposed
on seller and if we are seller we hope that
tax is imposed on buyer two reasons i would
give you and both are partially true the one
reason is that inadequate economic knowledge
we think legal incidence of tax is same as
the real incidence of tax thats one point
of you know we do not understand that ok we
think if seller is paying then why should
we care ok and when similarly the second reason
is the here we are dealing with a very special
case we are talking about perfectly competitive
equilibrium although i havent talked about
this case in the detail but what we assume
that there are large number of buyers and
large number of
seller
seller
so in this case whenever you have this particular
scenario it doesnt matter whether tax is imposed
on buyer or on seller it would be decided
by who pays the tax would be decided by some
other factor that we will look at but if market
is not perfectly competitive then it does
matter who has to pay the taxes ok so that
scenario we are not talking about when we
talk about a different kind of market there
again we will give the example that what happens
when tax is imposed in this particular kind
of market fine but now lets look at it this
particular market see one way to you can look
at it just to explain just to get the field
of this part whats happening this is the these
are two original curve ok supply and this
is demand now lets say seller is being asked
to pay certain amount of tax per unit of good
sold in the market ok the tendency that seller
earlier if we continue with the example here
is four and here is
six
six what seller would realize seller would
think ok tax has been imposed to us i am just
talking colloquially the tax has been imposed
on us so lets pass this tax to the buyer what
would be an ideal for us that to charge six
plus two more unit that is the tax h eight
unit eight unit per quantity but seller would
also realize the demand is a downward sloping
function
if price goes up a buyers have to pay higher
price they would then they would buy less
of
goods
less of the goods they would not buy the same
amount they would buy less so what happens
if they pass the tax to consumer the quantity
bought will go down considerably so what they
realize that what if we they are they are
not interested in how much they charge they
are interested in maximizing their revenue
revenue is equal to p multiplied by q this
is p multiplied by q so if p goes up q comes
down so they are not interested in individual
p they are interested in on the whole thing
so they found the new equilibrium where these
two are they get the list effect where they
are able to maximize their revenue so they
they figure out that in certain scenario its
good idea to share some of the tax burden
so that consumer doesnt decrease consumers
dont decrease their consumption considerably
you understand thats why its happening when
it is imposed on buyer what happens the same
if it is imposed on buyer sellers natural
reaction would be why should we bother you
know it is imposed on buyer but immediately
they realize or even before they think about
it if they have they are in business for long
time they realize this that if they have to
pay higher amount per unit of the good they
will buy less of the goods
so its good idea to take away some of the
burden from consumers so they consume more
of goods and thats why they will end up sharing
some of the tax burden is it clear thats why
the tax incidence is different the economic
tax incidence is different from legal tax
incidence we are talking about realistic scenario
