Foreign competition and optimal privatization with excess burden of taxation

We examine in a mixed oligopoly setting how foreign competition and the excess burden of taxation will affect privatization policy in the presence of strategic tax/subsidy policies. We show that in the presence of excess burden of taxation with foreign competitors, output subsidy coupled with import...

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Bibliographic Details
Published inJournal of economics (Vienna, Austria) Vol. 125; no. 2; pp. 189 - 204
Main Authors Lee, Jen-Yao, Wang, Leonard F. S.
Format Journal Article
LanguageEnglish
Published Vienna Springer 01.10.2018
Springer Vienna
Springer Nature B.V
Subjects
Competitors
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Game Theory
Macroeconomics/Monetary Economics//Financial Economics
Microeconomics
Oligopoly
Political appointments
Privatization
Public Finance
Social and Behav. Sciences
Social welfare
Subsidies
Tariffs
Taxation
Import tariff
Cournot competition
Excess burden of taxation
H21
F13
Output subsidy
L13
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Summary:We examine in a mixed oligopoly setting how foreign competition and the excess burden of taxation will affect privatization policy in the presence of strategic tax/subsidy policies. We show that in the presence of excess burden of taxation with foreign competitors, output subsidy coupled with import tariff and partial privatization is adopted to improve the social welfare. However, if the excess burden of taxation is relatively large, the government may switch to use production tax coupled with tariff policy and partial privatization to improve the social welfare.
ISSN:0931-8658
1617-7134
DOI:10.1007/s00712-017-0592-y