Taxation and the Control of International Oligopoly
The paper shows how the differing incidence of specific and ad valorem taxation in imperfectly competitive markest can be exploited to control international oligopoly. If countries act cooperatively, the tax instruments used in combination achieve the same outcome, either the first-best or the constrained second-best, as direct production control. When a single country regulates the oligopoly, circumstances are shown to exist in which taxation is superior to production control.
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