Financing a Nationalized Monopoly: Coase's Versus Hotelling-Lerner's Solution

Ramón J. Torregrosa
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Ramón J. Torregrosa: Universidad de Salamanca

Public Finance Review, 1998, vol. 26, issue 4, 392-405

Abstract: In 1946, Coase rejected Hotelling-Lerner's solution for financing a nationalized monopoly on the grounds that any tax structure could distort relative prices. In monopoly where two-part tariffs are infeasible, Coase suggested average cost pricing as a noninfenor solution to the above policy. This article shows that, in a general equilibrium model, it is possible to choose a distortionary Hotelling-Lerner's tax policy that is superior to average cost pricing.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:26:y:1998:i:4:p:392-405

DOI: 10.1177/109114219802600406

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