Oligopoly Deregulation in General Equilibrium: A Tax Neutralization Result / Gilbert E. Metcalf, George Norman.

Format:

Book

Author/Creator:

Metcalf, Gilbert E.

Contributor:

National Bureau of Economic Research.

Norman, George.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9416.

NBER working paper series no. w9416

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Oligopoly Deregulation in General Equilibrium

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

We examine the interplay between market structure and the form that commodity taxation should take in a general equilibrium model in which firms produce differentiated products and so are able to exert market power. Our analysis takes account of two important recent developments that affect market structure and so the appropriate design and effectiveness of commodity taxation: market deregulation and technological change. When market deregulation facilitates price discrimination, we find that tax policy is ineffective as a means to influence market structure. We further show that when tax rates are set optimally government is able to neutralize the potentially detrimental welfare impact of restrictive entry conditions in the differentiated product sector. Finally, we present conditions under which price discrimination is welfare improving.

Notes:

Print version record

January 2003.