A BEJEAP Advances article.

Abstract

This paper studies optimal linear taxation in a general equilibrium model with Cournot oligopoly. The main result is the following. With imperfect competition the tendency toward "inverse elasticities" tax rules will be weakened and may even be reversed. That is, an upward sloping relationship may exist between an industry's optimal tax rate and its own-price elasticity of demand, unlike the perfectly competitive case.

Submitted: June 10, 2003 · Accepted: September 24, 2005 · Published: October 18, 2005

Originally published in Advances in Economic Analysis & Policy.

Recommended Citation

Reinhorn, Leslie J. (2005) "Optimal Taxation with Cournot Oligopoly," Advances in Economic Analysis & Policy: Vol. 5 : Iss. 1, Article 6.
Available at: http://www.bepress.com/bejeap/advances/vol5/iss1/art6