Arbeitspapier

On the non-neutrality of profit taxation in a Cournot oligopoly with environmental effects

We consider the joint effect of profit and Pigouvian taxation in a model of imperfect competition. We show that, when both profit taxation and Pigouvian taxation/subsidy are used, the former is no longer neutral. The two fiscal tools are substitutes, and for any profit taxation rate there exists a unique Pigouvian tax that entails the first best outcome as an equilibrium. Our analysis therefore suggests that policy makers in charge of different taxation policies should coordinate in order to optimally design the tax menu for firms.

Language
Englisch

Bibliographic citation
Series: Quaderni - Working Paper DSE ; No. 662

Classification
Wirtschaft

Event
Geistige Schöpfung
(who)
Dragone, Davide
Lambertini, Luca
Palestini, Arsen
Event
Veröffentlichung
(who)
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
(where)
Bologna
(when)
2009

DOI
doi:10.6092/unibo/amsacta/4584
Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Dragone, Davide
  • Lambertini, Luca
  • Palestini, Arsen
  • Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)

Time of origin

  • 2009

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