A Tariff-Tax Reform under Oligopoly and Free Entry

Kenji Fujiwara () and Ryoma Kitamura ()

No 88, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Constructing a model of oligopoly with free entry, this paper examines the effects of a tariff reduction accompanied with a unit of consumption tax increase on welfare, government revenue, and market access. We show that the suggested policy reform reduces welfare while enhancing government revenue and market access by inducing further excess entry. Some implications of this finding are discussed in comparison with the case with a fixed number of firms, which involves a welfare loss and an ambiguous effect on government revenue and market access.

Keywords: tariff-tax reform; oligopoly; free entry; welfare; government revenue; market access. (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2012-04, Revised 2012-04
New Economics Papers: this item is included in nep-acc, nep-ind and nep-pbe
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http://192.218.163.163/RePEc/pdf/kgdp88.pdf First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:88

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