Financing a nationalized monopoly: Coase's versus hotelling-lerner's solution

Ramon Torregrosa

Working Papers. Serie EC from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Coase (1946) rejected the superiority of Hotelling-Lemer solution upon average-cost pricing in face to fmance a nationalized monopoly due to taxes being distortionary. In this paper, we show that this conjecture is not general1y true. According to the utilitarian criterion, we find a distortionary Hotelling-Lel'l1er tax policy which improves upon the average cost pricing. Coase (1946) rechazó la superioridad de la solución de Hotelling-Lemer sobre el equilibrio precio-coste medio debido a la distorsión causada por los impuestos. En este trabajo se muestra que esta conjetura no es cierta en general. Encontrando que, de acuerdo con el criterio utilitarista, es posible una política fiscal Hotelling-Lel'l1er distorsionante que mejora el equilibrio precio-coste medio.

Keywords: Imposición distorsionante; Impuestos de capitación; equilibrio precio-coste medio; optimo subsidiario Distortionary taxation; lump-sum taxation; optimal taxation; price-average cost equilibrium; second-best (search for similar items in EconPapers)
Pages: 24 pages
Date: 1996-12
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasec:1996-16

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