Mixed duopoly,privatization, and subsidization with excess burden of taxation

We investigate optimal tax‐subsidy policies in mixed and private oligopolies with excess burden of taxation. We compare the optimal subsidies and the resulting welfare levels among four regimes: mixed and private Cournot duopolies and Stackelberg competition with public and private leaderships. We show that, in contrast to the existing works on the privatization neutrality theorem, privatization affects resulting welfare.     

Foreign-Investment Tax and Tariff Policies in Developing Countries

In this paper we examine the welfare effects of tax on foreign capital and tariff policies for a small open economy with sectoral unemployment. The individually and jointly optimal tax and tariff rates in the absence or presence of international tax credits are derived. A subsidy on foreign capital coupled with a tariff can be jointly optimal when tax credits are absent in the source country. However, the capital subsidy policy may fail to hold when the foreign country follows a tax credit system.     

Excess Burden of Taxation and Environmental Policy Mix with a Consumer‐Friendly Firm

This study examines the environmental policy mix of tradable emission permits and emission taxes in a duopoly model with a consumer‐friendly firm. We analyse the interplay of the two policies and the welfare consequences in the presence of excess burden of taxation. We show that an emission tax can be redundant when both the excess burden of taxation and the degree of consumer friendliness are insignificant. However, when the excess burden of taxation is significant, tradable permits policy with tax treatment should be applied to enhance welfare in the presence of a consumer‐friendly firm. Finally, under the tax revenue‐neutral case where the excess burden of taxation does not matter, the environmental policy mix is also efficient if the degree of consumer friendliness is sufficiently high.     

Privatization in a Small Open Economy with Imperfect Competition

We look at privatization in a general equilibrium model of a small, tariff‐distorted, open economy. There is a differentiated good produced by both private and public sector enterprises. A reduction in government production in order to cut losses from such production raises the returns to capital and increases the tariff revenue, which are welfare‐improving. However, privatization also leads to lower wages and possibly fewer private brands. This lowers workers’ welfare, which may make privatization politically infeasible. Privatization can improve workers’ welfare with complementary reforms, e.g., attracting foreign investment or trade liberalization.     

Are Higher Education Subsidies Second Best?

An optimal taxation framework is considered in which part of the population can take advantage of investment in higher education. It is shown that social welfare can sometimes be increased by supplementing linear income taxes with a subsidy to material investment in higher education, but that social welfare can never be increased by supplementing a non‐linear income tax with such a subsidy.     

最优关税和部分私有化战略-产品差异的混合寡头模型

本文通过构建一个双寡头垄断竞争的博弈模型,探讨了存在产品差异的混合寡头市场(mixed oligopoly)中,国内外企业的产品差异程度和公有企业私有化程度对最优关税的影响。研究结果表明:无论政府以收入极大化还是福利极大化为目标,其制定的关税税率都应随着私有化程度和产品差异程度的提高而提高,政府福利目标与关税收入目标都与产品差异程度成正比。与最近的其他研究发现不同,在不存在私有化或者当私有化程度相对较低而差异程度相对较高时,收入极大化关税税率总是高于福利极大化关税税率。同时本文还得出,福利极大化下的社会最优私有化比例总是大于关税收入极大化的社会最优私有化比例。因此,以社会福利极大化为目标的政府比以关税收入极大化为目标的政府更加倾向于私有化本国的公有企业。     

Partial Privatization,Foreign Competition,and Optimum Tariff*

Using a simple international mixed oligopoly model with one public and one or more foreign firms, this paper examines the effect of partial privatization or foreign competition on optimum tariffs and finds that foreign competition lowers the optimal tariff rate but partial privatization raises it. This result implies that trade liberalization is welfare improving if a country opens up its economy by allowing foreign competition. However, the liberalization policy is not desirable when the country only partially or completely privatizes its publicly‐owned enterprises.     

Optimal Countervailing Intervention

This paper examines the optimal countervailing measures in response to foreign subsidy. Two alternative objectives are considered: (1) to maintain the domestic producer price, or (2) to maintain the initial import level. Three different instruments are discussed: a tariff, a production subsidy, and a consumption tax. Their rankings in terms of welfare costs are established. One important finding is that, contrary to present convention, the optimal countervailing rate may have to exceed the foreign subsidy rate. [411]     

On the marginal excess burden of taxation in an overlapping generations model

We extend marginal excess burden (MEB) analysis in public finance literature to a dynamic general equilibrium model with incomplete markets and heterogeneous households. This extension allows us to quantitatively assess efficiency ranking and incidence of taxes. Our results indicate a disparity in welfare cost and distributional consequence of different forms of taxation on capital, labor and consumption. According to our MEB ranking, capital income taxation appears to be least efficient as it results in larger marginal excess burdens, compared to labor income tax and consumption tax. The tax incidence analysis shows variation of tax burdens across households, depending on their age, income type and generation. In particular, older households with higher income bear the highest burden of company income tax; meanwhile, future born households bear the highest burden of personal income tax. Hence, our MEB analysis demonstrates a fruitful approach to better understanding efficiency and incidence of tax reforms in one unified framework.     

Optimal policy for environmental goods trade in asymmetric oligopolistic eco-industries

In this paper, we examine the optimal structure of an environmental tax to pollution, a production subsidy to a domestic eco-industry, and an import tariff on environmental goods (EGs) in a two-country model where the home country imports EGs from the foreign country. Home and foreign firms that produce EGs engage in Cournot competition. We then assume that the number of the home local firms which produce EGs is constant, but that of the foreign firms is variable. Our main findings are as follows: (I) The optimal environmental tax level may be lower than the Pigouvian level even if the tax has a positive impact on the output of EGs produced by a domestic firm. (II) The optimal tariff level may be positive when the country implements the first best policy combination in a closed economy regarding the environmental tax and the subsidy. (III) The optimal subsidy level may be positive, and then the subsidy may be substitutive for the import tariff on EGs.     

Mixed Duopoly and Environment

We show under general demand and cost conditions that in a mixed duopoly with pollution the government can implement the socially optimal outputs and abatements by a tax‐subsidy scheme and keeping the public firm fully public. The scheme requires taxing outputs and subsidizing abatements at different rates, unlike a pollution tax. Our result improves on the shortcoming of a pollution tax to implement the social optimum. We also show that when the private firm is partly foreign‐owned, the government will adopt some privatization and will not implement the social optimum, though the social optimum is implementable.     

开放条件下粮食政策实施的福利经济分析

本文研究目的在于建立一个结合关税配额制度、粮食补贴政策和生态退耕政策的粮食部门均衡模型GSEM,来模拟比较不同政策调整对粮食部门社会福利影响,从而对存在明显目标冲突的粮食政策进行调整优化.研究结论显示,关税配额制度和生态退耕政策会减少粮食部门社会福利,粮食补贴政策可以提高粮食部门福利,能够弥补市场开放对生产者福利损失,其中直接补贴政策中的面积补贴方式最有效率.     

Emission tax and optimal privatization in Cournot–Bertrand comparison

We compare a Cournot with a Bertrand duopoly in a differentiated mixed market when both emission tax and privatization policies are used together. We find that the optimal emission tax is always lower than the marginal environmental damage, and it is always lower under Cournot than under Bertrand. We also find that the optimal privatization is always a partial privatization, and it is always higher under Cournot than under Bertrand. The socially optimal combinations of emission tax and privatization will damage the environment most, but Cournot yields lower environmental damage and social welfare than those under Bertrand. Finally, we show that the environmental damage is non-monotone in the level of privatization under both Cournot and Bertrand competitions.     

Trade Liberalization in the Presence of Foreign Direct Investment and Tax Credits: Estimates for Costa Rica

The paper uses a calibrated general-equilibrium model to quantify the welfare impact of trade liberalization—and compute the optimal tariff structure—for Costa Rica when trade-policy-induced foreign direct investment and international capital taxation with credits are present. It shows that complete trade liberalization reduces Costa Rica's welfare, as it leads to an outflow of capital and loss of tax revenue which more than offset the efficiency gains from an enhanced resource allocation. The optimal tariff structure for the Costa Rican economy turns out to be a mixture of relatively small import tariffs and subsidies.     

Capital income taxation in a growing world economy

This paper deals with dynamic adjustment in large economies to changes in the rate of capital income taxation or in the rate of investment tax credit in one country. The framework applied in the paper is a continuous-time, overlapping generations model with two countries. It features population growth and debt non-neutrality. We address impact and steady state effects of capital income tax and investment subsidy changes in the home country on consumption per capita, the capital intensity, and the per capita net foreign asset position in both countries. We also briefly consider individual welfare consequences of these policies.     

Welfare‐improving Coordinated Tariff and Sales Tax Reforms under Imperfect Competition

This paper studies the welfare effects of coordinated domestic sales tax reform associated with a reduction of the import tariff under imperfect competition. We set up a simple oligopoly trading model where domestic and exporting firms compete in the home market. We show that, if the initial levels of import tariff and sales tax are positive, there always exist welfare‐improving sales tax reforms. In some cases, a reduction of the sales tax accompanied by a reduction of the import tariff increases social welfare, whereas in other cases, raising the sales tax can increase social welfare.     

Tariffs and privatization policy in a bilateral trade with corporate social responsibility

Corporate social responsibility (CSR) has become a global business strategy and thus it provides significant welfare implications for designing optimal policies. This paper investigates the impact of CSR on policy interaction between tariffs and privatization in an international bilateral trade model. We find that CSR is closely related to the government's policy decisions on tariffs. In particular, we find that the strategic tariff for increasing domestic welfare is always higher (lower) than the efficient tariff for improving global welfare when the degree of CSR is low (high). We also show that a privatization policy raises tariff and worsens (improves) domestic welfare when the degree of CSR is low (high). Finally, we demonstrate that both countries choose a nationalization policy even though the privatization policy is globally optimal when the degree of CSR is high.     

Privatization and entries of foreign enterprises in a differentiated industry

We investigate whether or not privatization is beneficial from the viewpoint of social welfare in a monopolistic competition model. We discuss the relationship between the welfare effects of privatization and the degree of foreign direct investment in the private sector, which is an important problem in developing countries and in transition economies such as China and Central and Eastern European countries. We find that, in the long run, privatization of a public firm is more likely to improve welfare when the country depends on foreign capital in the private sector, whereas the opposite tendency exists in the short run.     

PRIVATIZATION AND EFFICIENCY GAIN IN AN INTERNATIONAL MIXED OLIGOPOLY WITH ASYMMETRIC COSTS*

This paper examines two policy instruments, privatization of the domestic public firm and imposition of a tariff on foreign private firms in an international mixed oligopolistic model with asymmetric costs. It first demonstrates that different orders of moves of firms will imply different government decisions on optimal tariff and on privatization policy. Following Hamilton and Slutsky (1990 ), this paper then uses an extended game to discuss endogenous roles. It indicates that the efficiency gain that highlights the importance of foreign competition is crucial in determining the welfare improving privatization policy. Moreover, the endogenous equilibria are associated with different government decisions on privatization.     

Optimal privatization and uniform subsidy policies: A note

The privatization neutrality theorem states that the share of public ownership in a firm does not affect welfare under an optimal uniform tax‐subsidy policy. We revisit this neutrality result. First, we investigate the case in which the private firm is domestic. We show that this neutrality result does not hold unless public and private firms have the same cost function. Next, we investigate a case in which both domestic and foreign investors own the private firm. We show that the optimal degree of privatization is never zero, and thus, the neutrality result does not hold, even when there is no cost difference between public and private firms.