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Mixed duopoly, privatization, and subsidization with excess burden of taxation

Authors


  • We are grateful to the participants at the seminars at the University of Tokyo for their helpful comments and suggestions. We are also indebted to two anonymous referees and the co-editor, Joanne Roberts, for their precious and constructive comments and suggestions. Needless to say, we are responsible for any remaining errors. We gratefully acknowledge the financial supports of Grant-in-Aid from the Japanese Ministry of Education, Science and Culture. The second author also acknowledges financial support from the Seimeikai Foundation. Email: yoshihiro.tomaru@gmail.com

Abstract

We investigate optimal tax-subsidy policies in mixed and private oligopolies with excess burden of taxation. We compare the optimal subsidies and the resulting welfare levels among four regimes: mixed and private Cournot duopolies and Stackelberg competition with public and private leaderships. We show that, in contrast to the existing works on the privatization neutrality theorem, privatization affects resulting welfare.

Abstract

Duopole mixte, privatisation et subsidisation en présence de fardeau fiscal excédentaire. On examine les politiques optimales de taxes et de subventions dans le cas d'oligopoles mixtes et privés en présence de fardeau fiscal excédentaire. On compare les subsides optimaux et les effets sur le niveau de bien-être dans quatre régimes : les duopoles de Cournot (mixte et privé) et la concurrence à la Stackelberg avec leadership public et privé. On montre que contrairement à ce que suggéraient les travaux antérieurs sur le théorème de la neutralité de la privatisation, la privatisation affecte les niveaux de bien-être.

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