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Specific and Ad Valorem Taxation in Asymmetric Cournot Oligopolies

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  • Vincenzo Denicolo
  • Massimo Matteuzzi

Abstract

This paper compares ad valorem and specific taxes in asymmetric homogenous Cournot oligopolies with constant marginal costs. We show that for any given level of industry output, ad valorem taxes are superior to specific taxes in terms of revenue raised. If the tax rates are sufficiently high, for any given specific tax one can find an ad valorem tax that leads to greater tax revenue, consumer surplus, and industry profits. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Vincenzo Denicolo & Massimo Matteuzzi, 2000. "Specific and Ad Valorem Taxation in Asymmetric Cournot Oligopolies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(3), pages 335-342, May.
    • Handle: RePEc:kap:itaxpf:v:7:y:2000:i:3:p:335-342
    DOI: 10.1023/A:1008709914537
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    References listed on IDEAS

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    7. Dierickx, I. & Matutes, C. & Neven, D., 1988. "Indirect taxation and cournot equilibrium," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 385-399.
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