IDEAS home Printed from
   My bibliography  Save this article

Effects of ad-valorem taxes on location decision under free entry Cournot oligopoly


  • Yeung-Nan Shieh


This paper examines the impact of the ad-valorem commodity tax as a policy device on output and location decisions of undifferentiated oligopolistic firms with free entry. It shows that: (1) When the distance between the plant location and the output market is held constant, the optimum location for the oligopolistic firm would be independent of the ad-valorem tax if the production function is homothetic, and (2) when the distance between the plant location and the output market is a decision variable, the optimum location for the oligopolistic firm will move closer to the output market if the demand function is linear or concave. These results are significantly different from the conventional results based on the monopolistic location model. It indicates that the effect of an ad-valorem tax on the location decision of oligopolistic firms crucially depend upon the shape of demand function.

Suggested Citation

  • Yeung-Nan Shieh, 2013. "Effects of ad-valorem taxes on location decision under free entry Cournot oligopoly," Economics and Business Letters, Oviedo University Press, vol. 2(1), pages 5-12.
  • Handle: RePEc:ove:journl:aid:9524

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Hwang, Hong & Mai, Chao-Cheng & Shieh, Yeung-Nan, 2007. "Production-location decision and free entry oligopoly: A correction," Journal of Urban Economics, Elsevier, vol. 61(3), pages 576-579, May.
    2. Leon N. Moses, 1958. "Location and the Theory of Production," The Quarterly Journal of Economics, Oxford University Press, vol. 72(2), pages 259-272.
    3. Martinich, Joseph S. & Hurter, Arthur P., 1990. "Generalized comparative statics for the production-location problem," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 275-294, November.
    4. Besley, Timothy, 1989. "Commodity taxation and imperfect competition : A note on the effects of entry," Journal of Public Economics, Elsevier, vol. 40(3), pages 359-367, December.
    5. Mai, Chao-cheng & Hwang, Hong, 1992. "Production-location decision and free entry oligopoly," Journal of Urban Economics, Elsevier, vol. 31(2), pages 252-271, March.
    6. Hanoch, Giora, 1975. "The Elasticity of Scale and the Shape of Average Costs," American Economic Review, American Economic Association, vol. 65(3), pages 492-497, June.
    7. Hong Hwang & Chao-cheng Mai, 1999. "Optimal Export Taxes with an Endogenous Location," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 940-952, April.
    8. Ming Chen & Yeung-Nan Shieh, 2011. "Specific commodity taxes, output and location decision under free entry oligopoly," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 25-36, August.
    9. Chiung-I Hwang & Yeung-Nan Shieh, 2007. "Factor market oligopsony and the location decision of free entry oligopoly," Economics Bulletin, AccessEcon, vol. 18(6), pages 1-7.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Yeung-Nan Shieh, 2015. "A note on location and the output effect of ad-valorem taxes under free entry oligopoly," Economics and Business Letters, Oviedo University Press, vol. 4(1), pages 30-35.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ove:journl:aid:9524. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Francisco J. Delgado) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.