the price of the commodity for sale is determined by demand supply relationship. when a government lay a tax on a commodity. call it T.
when the tax is first levied, businesses cant raise prices (‘to forward the cost on to consumers’) any more than they could have before the tax was brought into force. reason is the consuemr effective demand hasnt changed, and neither has the supply.(commodities waiting on shelves). these commodities sell at the same old price initially P. but know a typical business thats a seller bears the cost. he only gets P-T for each unit he sells.
ramifications down the line are the business of supply ing the commodity is less profitable. investment and entrepeunership leak out from the tax hit industry. the effect of this is to reduce supply.
now with a reduced supply. the same effective demand as before must create an increase of the market price for the product. the price has been raised because of the product shoprtage the tax has caused.