Optimal Fiscal Regime in a Spatial Duopoly |
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| Authors: | Luca Lambertini |
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| Institution: | Dipartimento di Scienze Economiche, Università degli Studi di Bologna, Strada Maggiore 45, I-40125, Bologna, Italy;Linacre College, Oxford, OX1 3JA, United Kingdom |
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| Abstract: | We investigate a horizontally differentiated duopoly in which a public authority can either tax or subsidize firms, in order to induce duopolists to choose the socially optimal locations. The policy proposed here is such that welfare maximization is achieved by directly affecting firms' location without explicitly modifying their price behavior. |
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