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Mixed duopoly, privatization, and subsidization with excess burden of taxation

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  • Toshihiro Matsumura
  • Yoshihiro Tomaru

Abstract

We investigate optimal taxsubsidy policies in mixed and private oligopolies with excess burden of taxation. We compare the optimal subsidies and the resulting welfare levels among four regimes: mixed and private Cournot duopolies and Stackelberg competition with public and private leaderships. We show that, in contrast to the existing works on the privatization neutrality theorem, privatization affects resulting welfare.

Suggested Citation

  • Toshihiro Matsumura & Yoshihiro Tomaru, 2013. "Mixed duopoly, privatization, and subsidization with excess burden of taxation," Canadian Journal of Economics, Canadian Economics Association, vol. 46(2), pages 526-554, May.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:2:p:526-554
    DOI: 10.1111/caje.12022
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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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