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Entry-License Tax: Stackelberg versus Cournot

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  • Cato, Susumu
  • Matsumura, Toshihiro

Abstract

This study investigates how leadership affects public policies in markets where the number of firms is endogenously determined. We focus on the relationship between the relative efficiency of an incumbent firm and the optimal entry tax (entry barrier). We find that this relationship depends on whether the incumbent can commit to the output before the entries of new firms. The optimal entry tax is decreasing (res. increasing) in the productivity of the incumbent when it takes (res. does not take) leadership. We also find that the optimal entry barrier occurring when the incumbent takes leadership is lower than that when it does not.

Suggested Citation

  • Cato, Susumu & Matsumura, Toshihiro, 2013. "Entry-License Tax: Stackelberg versus Cournot," MPRA Paper 81297, University Library of Munich, Germany, revised 12 Sep 2017.
    • Handle: RePEc:pra:mprapa:81297
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    References listed on IDEAS

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    Cited by:

    1. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Lack of commitment to future privatization policies may lead to worst welfare outcome," Economic Modelling, Elsevier, vol. 88(C), pages 181-187.
    2. Laszlo Goerke, 2022. "Endogenous Market Structure and Partisan Competition Authorities," IAAEU Discussion Papers 202201, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Wang, Leonard F.S. & Zeng, Chenhang & Zhang, Qidi, 2019. "Indirect taxation and consumer welfare in an asymmetric Stackelberg oligopoly," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    4. Laszlo Goerke, 2022. "Partisan competition authorities, Cournot‐oligopoly, and endogenous market structure," Southern Economic Journal, John Wiley & Sons, vol. 89(1), pages 238-270, July.

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    More about this item

    Keywords

    Stackelberg; Cournot; free entry; entry tax; competition policy; beneficial concentration;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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