On the non-neutrality of profit taxation in a Cournot oligopoly with environmental effects

Dragone, Davide ; Lambertini, Luca ; Palestini, Arsen (2009) On the non-neutrality of profit taxation in a Cournot oligopoly with environmental effects. Bologna: Dipartimento di Scienze economiche DSE, p. 11. DOI 10.6092/unibo/amsacta/4584. In: Quaderni - Working Paper DSE (662). ISSN 2282-6483.
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Abstract

We consider the joint effect of profit and Pigouvian taxation in a model of imperfect competition. We show that, when both profit taxation and Pigouvian taxation/subsidy are used, the former is no longer neutral. The two fiscal tools are substitutes, and for any profit taxation rate there exists a unique Pigouvian tax that entails the first best outcome as an equilibrium. Our analysis therefore suggests that policy makers in charge of different taxation policies should coordinate in order to optimally design the tax menu for firms.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Dragone, Davide
Lambertini, Luca
Palestini, Arsen
Keywords
externalities, Pigouvian taxation, oligopoly
Subjects
ISSN
2282-6483
DOI
Deposit date
15 Feb 2016 12:59
Last modified
15 Feb 2016 12:59
URI

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