Specific excise taxation in a unionised differentiated duopoly

Michele Santoni

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: This article considers the incidence and welfare effects of a specific excise tax in a unionized duopoly model with differentiated products, linear demand and cost curves, and wage bargaining. The article allows for both Cournot and Bertrand competition. The article shows that unionization lowers the degree of undershifting of the tax on the producer's net price, the marginal increase in the consumer's price, and the employment loss. The excess burden of an equal revenue tax is higher with a unionized labor market and higher with Cournot than Bertrand competition. Unionization increases the optimal output subsidy with wage bargaining. This paper is published in Public Finance Review, Vol. 28, No. 4, 351-371 (2000).

Keywords: Tax incidence; excise duty; unionized oligopoly (search for similar items in EconPapers)
JEL-codes: H2 J5 L1 (search for similar items in EconPapers)
Date: 2000-01-01
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Journal Article: Specific Excise Taxation in a Unionized Differentiated Duopoly (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:mil:wpdepa:2000-06

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