Social Efficiency of Market Entry Under Tax Policy

Abstract: We provide a new rationale for socially insufficient market entry. We show that if the shadow cost of public funds is sufficiently high, the number of firms under free entry can be socially insufficient if the tax policies are “time inconsistent”, so that the governments cannot commit to the tax policies before market entry of firms. Hence, strategic tax policies may provide a reason why policymakers should engage in pro-competitive policies. Lump-sum subsidies to firms may be a way to achieve that goal.

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch

References and Relationships

• Bibliographic citation: Social Efficiency of Market Entry Under Tax Policy ; volume:22 ; number:3 ; year:2022 ; pages:601-610 ; extent:10 ; The B.E. journal of economic analysis & policy ; 22, Heft 3 (2022), 601-610 (gesamt 10)

Contributors, Places and Time

• Creator: Basak, Debasmita ; Mukherjee, Arijit

Further information

• DOI: 10.1515/bejeap-2022-0012
• URN: urn:nbn:de:101:1-2022071914293394961359
• Rights: Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 15.08.2025, 7:29 AM CEST