Taxation on a mixed oligopoly in the presence of foreign ownership

Chia-Chi Wang and Jiunn-Rong Chiou

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 3, 342-355

Abstract: This paper analyzes the optimal taxation policy in a mixed duopoly when the private firm is jointly owned by domestic and foreign investors. The optimal policy is tax if the foreign shareholding is high enough; otherwise, it should be subsidy. Besides, to obtain a higher welfare, the taxation policy is superior to the privatization policy only when the private firm is mainly domestically owned. However, when full foreign shareholding of the private firm is allowed, the taxation and privatization can obtain the same level of social welfare regardless of the public firm’s marginal cost.

Date: 2016
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DOI: 10.1080/16081625.2016.1188448

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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