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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 tax‐subsidy 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. Duopole mixte, privatisation et subsidisation en présence de fardeau fiscal excédentaire. On examine les politiques optimales de taxes et de subventions dans le cas d'oligopoles mixtes et privés en présence de fardeau fiscal excédentaire. On compare les subsides optimaux et les effets sur le niveau de bien‐être dans quatre régimes : les duopoles de Cournot (mixte et privé) et la concurrence à la Stackelberg avec leadership public et privé. On montre que contrairement à ce que suggéraient les travaux antérieurs sur le théorème de la neutralité de la privatisation, la privatisation affecte les niveaux de bien‐être.

Suggested Citation

  • Toshihiro Matsumura & Yoshihiro Tomaru, 2013. "Mixed duopoly, privatization, and subsidization with excess burden of taxation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(2), pages 526-554, May.
  • Handle: RePEc:wly:canjec:v:46:y:2013:i:2:p:526-554
    DOI: 10.1111/caje.12022
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    More about this item

    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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