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On the subsidization of local monopolies

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Author Info
Francois Boldron () (CORE, Universite Catholique de Louvain)

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Abstract

Firms compete in model of horizontal differentiation a la Hotelling. They use two-part tariffs but the market is such that, in equilibrium, it is not fully covered (firms are then local monopolies). The question we adressed in this paper is to determine what kind of subsidies are the best instruments to increase the coverage at the lowets cost. This paper shows first that an ad valorem subsidy on the usage price is a less costly instrument to increase the coverage than a per unit subsidy.

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File URL: http://www.economicsbulletin.com/2002/volume8/EB-02H20002A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 8 (2002)
Issue (Month): 3 ()
Pages: 1-10
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:8:y:2002:i:3:p:1-10

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Related research
Keywords: Commodity taxation; two-part tariffs;

Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue

References listed on IDEAS
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  1. François Boldron & Cyril Hariton, 2003. "Access charge and imperfect competition," Recherches économiques de Louvain, De Boeck Université, vol. 69(3), pages 319-340. [Downloadable!]
  2. Kowalczyk, Carsten & Skeath, Susan E., 1994. "Pareto ranking optimal tariffs under foreign monopoly," Economics Letters, Elsevier, vol. 45(3), pages 355-359. [Downloadable!] (restricted)
  3. Francis K. Cheung, 1998. "Excise Tax on a Non-Uniform Pricing Monopoly: Ad Valorem and Unit Taxes Compared," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1192-1203, November. [Downloadable!] (restricted)
  4. Laffont, Jean-Jacques, 1987. "Optimal taxation of a non-linear pricing monopolist," Journal of Public Economics, Elsevier, vol. 33(2), pages 137-155, July. [Downloadable!] (restricted)
  5. Skeath, Susan E. & Trandel, Gregory A., 1994. "A Pareto comparison of ad valorem and unit taxes in noncompetitive environments," Journal of Public Economics, Elsevier, vol. 53(1), pages 53-71, January. [Downloadable!] (restricted)
  6. Delipalla, Sofia & Keen, Michael, 1992. "The comparison between ad valorem and specific taxation under imperfect competition," Journal of Public Economics, Elsevier, vol. 49(3), pages 351-367, December. [Downloadable!] (restricted)
    Other versions:
  7. Michael Keen, 1998. "The balance between specific and ad valorem taxation," Fiscal Studies, Institute for Fiscal Studies, vol. 19(1), pages 1-37, February. [Downloadable!]
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