Per unit versus ad valorem taxes under strategic bilateral trade

Gagnie Pascal Yebarth
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Gagnie Pascal Yebarth: CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre

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Abstract: This paper compares ad valorem and per-unit taxes in a bilateral market where all traders have market power. To do so, we use a simple prototype of strategic market games, namely bilateral oligopoly models, and show that ad valorem taxation welfare-dominates per-unit taxation under strategic bilateral trade. Moreover, ad valorem and per-unit taxes have qualitatively different effects on strategic equilibrium offers.

Keywords: Ad valorem taxation; Noncooperative oligopoly; Per unit taxation; Welfare (search for similar items in EconPapers)
Date: 2025-03-30
Note: View the original document on HAL open archive server: https://hal.science/hal-05066263v1
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Published in Economics Bulletin, 2025, 45 (1), pp.384-391

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