Tax analysis in a limit pricing model

Felix Marcos
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Felix Marcos: Instituto Complutense de Análisis Económico. Universidad Complutense Campus de Somosaguas. Madrid.

No 9304, Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: This paper deals with taxation, profits of firms and welfare. More specifically it analyses the effect of a lump sum tax on a noncompetitive market with free entry. The main result is that there are relevant situations in which the tax increases the profits of the incumbent firms. Unfortunately this goes with a reduction in consumer suplus (and in social welfare measured by consumer surplus, plus profits of firms plus revenues of the Government). But a way is suggested and some examples given in which that problem can be overcome.

Keywords: Tax analysis; Análisis de impuestos. (search for similar items in EconPapers)
Pages: 18 pages
Date: 1993
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