This paper examines the role of a ‘green’ value‐added tax in the competitive environment of firms. Using data on firms in Romania and leveraging the introduction of a tax reduction on organic products in 2019, I show that although the overall market for organic goods grows and potential to generate windfall profit exists, the market share of incumbent firms decreases because of intensified competition post‐reform driven by new entrants competing for profits in the market. The market share decreases by about 2 percentage points after the reform. The effect depends on the relative elasticity of demand vis‐à‐vis supply in the market and the ability of a firm to protect its sales from new market entrants. Firms operating geographically further from the main consumer (i.e., more rural firms) and further upstream from the retail sector are more vulnerable to losing market share because urban demand is less elastic than rural demand and retail demand is less elastic than primary demand. Firms that are in markets where it is easier to switch from non‐organic to organic and that are less capital intensive (i.e., have fewer fixed costs) are more vulnerable to losing market share to new market entrants.

中文翻译：

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你吃增值税吗？绿色消费税与企业市场份额

本文探讨了“绿色”增值税在企业竞争环境中的作用。通过使用罗马尼亚企业的数据并利用 2019 年有机产品减税政策，我发现尽管有机产品的整体市场在增长并且存在产生暴利的潜力，但由于竞争加剧，现有企业的市场份额有所下降改革后，新进入者在市场上争夺利润。改革后市场份额下降约2个百分点。其效果取决于市场需求相对供给的相对弹性以及企业保护其销售免受新市场进入者影响的能力。地理位置远离主要消费者（即更多农村企业）和距离零售行业更上游的企业更容易失去市场份额，因为城市需求的弹性低于农村需求，而零售需求的弹性低于初级需求。所在市场更容易从非有机转向有机且资本密集度较低（即固定成本较少）的公司更容易将市场份额输给新的市场进入者。