Economics, Econometrics and Finance
a year ago

Taxes on Businesses Could Paradoxically Reduce Prices for Consumers

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Bulletin of Economic Research
The optimal specific or ad valorem tax when the other tax is exogenously imposed in a free‐entry Cournot oligopoly market
Kojun Hamada, Takao Ohkawa, Makoto Okamura

Paper Summary

The article explores how changing one tax affects the optimal tax rate in a competitive market. The researchers found that under certain conditions, a tax increase can actually lower prices and decrease the optimal tax rate.

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