The article explores how different types of competition in markets can impact the economy and the optimal tax policies needed to address inefficiencies. By considering various preferences and market structures, the researchers find that endogenous markups can amplify the effects of economic shocks on consumption and labor supply. They suggest that the best fiscal policy includes a variable labor income subsidy and a capital income tax that decreases over time. Additionally, they show that the number of goods available and strategic interactions among firms influence markups and tax policies, with profits also being subject to taxation. The study provides insights into how to create efficient market structures and design optimal tax rules for different economic scenarios.