Commodity Taxation and the Effects of Entry: A Case of Variety Preferences

Junko Doi () and Koichi Futagami

Journal of Economics, 2004, vol. 83, issue 3, 267-279

Abstract: We study the relationship between commodity taxation and the effect of entry with imperfect competition. We develop a simple general equilibrium model with imperfect competition in which consumers have variety preferences. As a result, we see that introducing specific taxes increases social welfare. Furthermore, we show that the optimal tax rule is contrary to the inverse elasticity rule. Copyright Springer-Verlag Wien 2004

Keywords: commodity taxation; entry; Ramsey rule; H21; L13; L16 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:83:y:2004:i:3:p:267-279

DOI: 10.1007/s00712-004-0083-9

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