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Indirect Taxes in Oligopoly in Presence of Licensing Opportunities

Author

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  • Neelanjan Sen

    (St. Xavier’s College)

  • Rajit Biswas

    (Indian Institute of Management Calcutta)

Abstract

This paper considers the relative efficiency of unit tax and ad valorem tax in a Cournot duopoly market in the presence of licensing opportunities after the announcement of the tax rates by the government. In case of fixed-fee licensing, if the unit cost difference of the firms is low and tax revenue of the government is high, then unit tax is more efficient than the ad valorem tax. If tax revenue of the government is low, then ad valorem tax is more efficient than unit tax. Ad valorem tax is more efficient than unit tax in the case of royalty licensing.

Suggested Citation

  • Neelanjan Sen & Rajit Biswas, 2017. "Indirect Taxes in Oligopoly in Presence of Licensing Opportunities," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 61-82, March.
    • Handle: RePEc:kap:jincot:v:17:y:2017:i:1:d:10.1007_s10842-016-0221-4
    DOI: 10.1007/s10842-016-0221-4
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    Cited by:

    1. Rajit Biswas & Vandana Thandassery Ramakrishnan, 2022. "Taxes and unemployment," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(2), pages 182-194, June.
    2. Leonardos, Stefanos & Petrakis, Emmanuel & Skartados, Panagiotis & Stamatopoulos, Giorgos, 2021. "Partial passive ownership holdings and licensing," Economics Letters, Elsevier, vol. 204(C).

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    More about this item

    Keywords

    Unit tax; Ad valorem tax; Cournot Competition; Licensing;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • L - Industrial Organization
    • L - Industrial Organization

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