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Licensed Unlicensed Requires Authentication Published by De Gruyter October 18, 2005

Optimal Taxation with Cournot Oligopoly

  • Leslie J. Reinhorn

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.

Published Online: 2005-10-18

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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