Promoting Lies through Regulation: Deterrence Impacts of Flexible versus Inflexible Policy
AbstractThis paper investigates the signaling role of tax policy in promoting or hindering the ability of a monopolist to practice entry deterrence. We study contexts in which tax policy is Flexible and inflexible. We show that not only an informative equilibrium can be supported where information is conveyed to the entrant, but also an uninformative equilibrium where information is concealed. In addition, inflexible policies promote information transmission. Therefore, our results identify a potential benefit of inflexible policies, namely, hampering the practice of entry deterrence.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2011-3.
Length: 34 pages
Date of creation: Apr 2011
Date of revision:
Entry deterrence; Signaling; Emission fees; Perfect commitment;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David B. Ridley, 2009.
"Herding versus Hotelling: Market Entry with Costly Information,"
Levine's Working Paper Archive
814577000000000174, David K. Levine.
- David B. Ridley, 2008. "Herding versus Hotelling: Market Entry with Costly Information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(3), pages 607-631, 09.
- Andrey Zaikin & Ana Espinola-Arredondo, 2012.
"The Carrot or the Stick: Water Allocation Strategies for Uzbekistan,"
2012-2, School of Economic Sciences, Washington State University.
- Zaikin, Andrey & Espinola-Arredondo, Ana, 2012. "The Carrot or the Stick: Water Allocation Strategies for Uzbekistan," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124680, Agricultural and Applied Economics Association.
- Ana Espinola-Arredondo & Felix Munoz-Garcia, 2011. "Environmental Protection Agencies: Measuring the Welfare Benefits from Regulation under Different Information Contexts," Working Papers 2011-11, School of Economic Sciences, Washington State University.
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