The Effect of Taxation on Strategic Entry

Domenico Buccella, Luciano Fanti and Luca Gori

Australian Economic Papers, 2026, vol. 65, issue 2, 190-201

Abstract: This note studies the effect of production taxation on entry in a standard Spence‐Dixit model of entry game. Taxation reduces both the sunk cost thresholds that block and deter the potential competitor's entry. However, the interaction between taxation and market structure can have important policy implications: in fact, for appropriate ranges of tax rates, a contested monopoly can generate higher tax revenues and social welfare than a Stackelberg duopoly.

Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/1467-8454.70022

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:65:y:2026:i:2:p:190-201

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is currently edited by Daniel Leonard

More articles in Australian Economic Papers from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().