In input markets, there are typically fewer buyers and sellers than in output markets, which can lead to market power. This market power can lead to higher prices for inputs, which can be passed on to consumers in the form of higher prices for the final product. This can lead to a situation where the tax burden is shifted to the consumer, rather than the producer. In output markets, there are typically more buyers and sellers, which can lead to more competition and lower prices. This can lead to a situation where the tax burden is shifted to the producer, rather than the consumer.
