Corporate profit tax,firm entry with unemployment,and income inequality

In this paper, we provide a general equilibrium analysis of corporate profit tax on income distribution, unemployment, and wage inequality. With firm dynamics in industrial sector, we identify a new channel through which profit tax affects income and wage inequality: profit tax cut will widen not only the wage gap between skilled and unskilled labor, but also exacerbate the wage inequality of unskilled labor among different sectors. The welfare effect of profit tax cut depends on unemployment deepening (labor-distortion effect) and more manufacturing firms enter the market (business-creation effect), eroding the market share of incumbent firms (business-stealing effect).     

Taxation,Network Externalities,Consumer Suffering,and Profit-Raising Entry: A Cautionary Note

Journal of Industry, Competition and Trade - Conventional wisdom is that higher competition, implying more active firms, benefits consumers but hurts producer surplus. Under unit taxation/subsidy,...     

What role should public firms play in the upstream market?

We investigate the upstream public firm's desirable option of production timing in the vertically related upstream market. We find that multiple equilibria may exist, including the Cournot-type and Stackelberg-type, with different degrees of privatization in the presence of upstream firms' efficiency gap. These equilibrium outcomes are also influenced by the intensity of downstream market competition. We further show the corresponding optimal degree of privatization in different phases of gradual privatization.