Profit taxation and capital accumulation in a dynamic oligopoly model

Massimo Baldini and Luca Lambertini ()

Japan and the World Economy, 2011, vol. 23, issue 1, 13-18

Abstract: We illustrate a differential oligopoly game using the capital accumulation dynamics à la Ramsey. We evaluate the effects of profit taxation, proving that there exists a tax rate yielding the same steady state social welfare as under social planning. Contrary to the static approach, our dynamic analysis shows that, in general, profit taxation affects firms' decisions concerning capital accumulation and sales. In particular, it has pro-competitive effects provided that the extent of delegation is large enough (and conversely).

Keywords: Differential; games; Capital; accumulation; Open-loop; equilibria; Closed-loop; equilibria; Profit; taxation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Profit Taxation and Capital Accumulation in Dynamic Oligopoly Models (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:23:y:2011:i:1:p:13-18

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