Optimal Taxation with Cournot Oligopoly

Leslie J. Reinhorn
2005 The B.E. Journal of Economic Analysis & Policy  
AbstractThis paper studies optimal linear taxation in a general equilibrium model with Cournot oligopoly. The main result is the following. With imperfect competition the tendency toward "inverse elasticities" tax rules will be weakened and may even be reversed. That is, an upward sloping relationship may exist between an industry's optimal tax rate and its own-price elasticity of demand, unlike the perfectly competitive case.
doi:10.1515/1538-0637.1165 fatcat:vwti4rrkgnhh3nluxe5hx6enre