We consider a simple, self-financing and informationally undemanding scheme to reduce the deadweight loss due to a monopolist's market power. Essentially, we propose taxing the monopolist and applying the tax revenue to generate a public demand for his output. It turns out that a favorable scenario for such a reform to generate an 'efficiency increase' (i.e. to increase total output) is an elasticity of market demand with an absolute value of less than 3 (a seemingly 'realistic' condition). We also consider the case for the implementation of the first best, and compare specific and ad-valorem taxes as a way to finance the public demand

Ascari, G., Bertoletti, P., Menegatti, M. (2005). Taxing a monopolist. RESEARCH IN ECONOMICS, 59(4), 321-334 [10.1016/j.rie.2005.09.002].

Taxing a monopolist

BERTOLETTI, P;
2005

Abstract

We consider a simple, self-financing and informationally undemanding scheme to reduce the deadweight loss due to a monopolist's market power. Essentially, we propose taxing the monopolist and applying the tax revenue to generate a public demand for his output. It turns out that a favorable scenario for such a reform to generate an 'efficiency increase' (i.e. to increase total output) is an elasticity of market demand with an absolute value of less than 3 (a seemingly 'realistic' condition). We also consider the case for the implementation of the first best, and compare specific and ad-valorem taxes as a way to finance the public demand
Articolo in rivista - Articolo scientifico
Monopoly regulation; Tax reform; First-best implementation
English
2005
59
4
321
334
none
Ascari, G., Bertoletti, P., Menegatti, M. (2005). Taxing a monopolist. RESEARCH IN ECONOMICS, 59(4), 321-334 [10.1016/j.rie.2005.09.002].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/244392
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