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Tax Incidence in Differentiated Product Oligopoly

Journal of Public Economics

Posted: 31 Mar 2000  

Simon P. Anderson

University of Virginia - Department of Economics

Andre de Palma

University of Cergy-Pontoise - Department of Economics

Brent Kreider

Iowa State University - Department of Economics

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Abstract

This paper analyzes the incidence of ad valorem and unit excise taxes under imperfect competition with differentiated products and price-setting (Bertrand) firms. Both taxes may be overshifted onto consumers, and a higher tax rate can increase short run firm profits (and hence the long run number of firms). The conditions for these results to occur depend on demand curvatures, and we provide summary statistics written in elasticity form. Surprisingly, much of the analysis corroborates Cournot results with homogeneous demand.


Notes: This is a description of the paper and not the actual abstract.

JEL Classification: D43, H21, H22, L13

Suggested Citation

Anderson, Simon P. and de Palma, Andre and Kreider, Brent, Tax Incidence in Differentiated Product Oligopoly. Journal of Public Economics. Available at SSRN: https://ssrn.com/abstract=215488

Simon P. Anderson

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3861 (Phone)
804-982-2904 (Fax)

Andre De Palma

University of Cergy-Pontoise - Department of Economics ( email )

Site des Chênes 1
33 boulevard du Port
Cergy-Pontoise, Cédex F-95011
France
33 1 34 25 61 81 (Phone)
33 1 34 25 62 33 (Fax)

Brent Kreider (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-6237 (Phone)
515-294-1700 (Fax)

HOME PAGE: http://www.econ.iastate.edu/faculty/kreider

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