Oligopoly and the need for special fiscal intervention

Oligopoly is an interesting subject for fiscal interventions. It is characterized by internationalization and by incomes larger than under competitiveness. Internationalization necessities that the rules which govern this kind of market should be not national, the single state being not being able to dominate the levy. An income greater than in competitiveness requires that such a part of income is subject to taxation at a greater rate than the average. This favours internationalization, since a very limited part of the fiscal system is affected. The implication should be that the normal fiscal system should be strictly national, as was the case of Italy until 1973 . This is the opposite of what is happening. In fact now direct company taxation, being based on the income produced, is basically national, whereas personal taxation, which is based on distributed incomes, is necessarily international (its base being worldwide by definition). This paper examines in particular why incomes from oligopoly are generally greater than in competitiveness. The result is intimately related to increasing returns, which regard in particular the industrial segment of the economy, now representing less than one third of total production. Here principally commercial and the administrative expenses increase much less than production. This in the end implies almost a monopolistic comportment.