Tax incidence under imperfect competition: Comment

Reny, Philip J.; Wilkie, Simon; Williams, Michael A.

doi:10.1016/j.ijindorg.2012.04.001

Cited by 12 publications

(12 citation statements)

References 9 publications

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“…This paper is related to three strands of the literature. Firstly, several papers have studied how a common shock to marginal costs affects firms' profits and social welfare in an asymmetric Cournot oligopoly with fixed number of firms (for example: Seade, 1985, Kimmel, 1992, Anderson et al, 2001, Février and Linnemer, 2004, Reny at al., 2012, Amir et al, 2016,, Häckner and Herznig, 2016. A result of this literature is that such a shock can be profitable for high-cost firms vis-à-vis low-cost firms.…”

Section: Related Literaturementioning

confidence: 99%

Protective Excise Taxation

Santoni

2017

J Ind Compet Trade

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Forthcoming in the Journal of Industry, Competition and Trade, 2017. Abstract:In a small open economy composed of unionised international Cournot-Nash duopolies, a self-interested government has unilateral incentives to set higher specific domestic excise duties under the destination principle when the typical foreign firm is dominant and the import-competing sector is small. Excise taxes may emerge in political equilibrium when domestic firms and unions lobby for protection and the government is unable to use alternative protective policies because of international agreements. In so far as the government is prepared to exchange tax revenues for political contributions, under some conditions the excise tax rate will be higher than the one chosen without lobbying.

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Section: Related Literaturementioning

confidence: 99%

Protective Excise Taxation

Santoni

2017

J Ind Compet Trade

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“…This issue relates to cost pass‐through (recent contributions include Reny et al . [], and Weyl and Fabinger []), and provides an answer to the question on tax incidence in vertical oligopoly. We focus on the downstream ad valorem tax since, as shown in Section III, this tax is the most efficient one.…”

Section: Effects On Consumer Pricementioning

confidence: 99%

“…In particular, we investigate whether consumer prices increase by more or less in a vertical oligopoly than in an industry with perfect upstream competition. This issue relates to cost pass-through (recent contributions include Reny et al [2012], and Weyl and Fabinger [2013]), and provides an answer to the question on tax incidence in vertical oligopoly. We focus on the downstream ad valorem tax since, as shown in Section III, this tax is the most efficient one.…”

Section: Effects On Consumer Pricementioning

confidence: 99%

Indirect Taxation in Vertical Oligopoly

Peitz

Reisinger

2014

The J Industrial Economics

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This paper analyzes the effects of specific and ad valorem taxation in an industry with downstream and upstream oligopoly and endogenous entry in both layers. We find that it is typically more efficient to levy an ad valorem tax downstream than upstream, while it is immaterial on which layer a specific tax is levied. We also show that tax revenues should be raised only through ad valorem taxes. Furthermore, we provide conditions under which the introduction of an indirect tax improves welfare. From a total surplus perspective, excise taxes tend to appear in a less favorable light when the full vertical supply chain is considered compared to a partial analysis which only takes into account market power at one layer. Finally, we demonstrate that a tax tends to be shifted to a larger extent into the final consumer price in vertical oligopoly than in standard oligopoly.

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“…These results are mostly undisputed, and the rule of thumb is that the unit tax is the more harmful of the two taxes. 1 Describing market conduct by a parameter that spans the polar cases of competitive behavior and market share collusion, Reny, Wilkie, and Williams (2012) show how to calculate tax cost pass-through for the two taxes.…”

mentioning

confidence: 99%

“…The comparisons of unit and ad valorem taxes set forth by Delipalla and Keen (1992) for symmetric oligopoly and by Reny, Wilkie, and Williams (2012) for asymmetric oligopoly assume that market conduct is unaffected by taxes. That is, market conduct is the same whether there are taxes or not, and market conduct is, in consequence, also unaffected by the mix between the two kinds of taxes.…”

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confidence: 99%

Ad Valorem versus Unit Taxes in Oligopoly and Endogenous Market Conduct

Vetter

2013

Public Finance Review

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In oligopoly, comparison of the tax pass-through favors the use of ad valorem taxes compared to unit taxes. We argue that, in addition to differences in tax pass-through, the two taxes have a dissimilar effect on firms’ strategic interaction. The anticompetitive effects of the two taxes favor unit taxes over ad valorem taxes. We show both when there is a preference for unit taxation and when it is likely that the conventional preference for ad valorem taxation is upheld.

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Tax incidence under imperfect competition: Comment

Cited by 12 publications

References 9 publications

Protective Excise Taxation

Protective Excise Taxation

Indirect Taxation in Vertical Oligopoly

Ad Valorem versus Unit Taxes in Oligopoly and Endogenous Market Conduct

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