Comparison between specific taxation and volume quotas in a free entry Cournot oligopoly

We revisit the classic discussion of the comparison between tax and quota, but in a free-entry Cournot oligopoly. We investigate a quantity ceiling regulation as a quota policy. We find that tariff-quota equivalence holds if the firms are symmetric and the number of firms is given exogenously. Howev...

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Veröffentlicht in:	Journal of economics (Vienna, Austria) Austria), 2014-10, Vol.113 (2), p.125-132
Hauptverfasser:	Matsumura, Toshihiro, Okumura, Yasunori
Format:	Artikel
Sprache:	eng
Schlagworte:	Commercial regulation Consumers Economic theory Economic Theory/Quantitative Economics/Mathematical Methods Economics Economics and Finance Equilibrium Equivalence Equivalence relation Externalities Fiscal policy Free entry Game Theory Industrial regulation International environmental policy Macroeconomics/Monetary Economics//Financial Economics Market entry Microeconomics Oligopolies Oligopoly Preferences Private enterprises Public Finance Quota systems Quotas Regulation Social and Behav. Sciences Studies Tariffs Tax policy Tax rates Tax revenues Taxation Taxes Total output
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Beschreibung
Zusammenfassung:	We revisit the classic discussion of the comparison between tax and quota, but in a free-entry Cournot oligopoly. We investigate a quantity ceiling regulation as a quota policy. We find that tariff-quota equivalence holds if the firms are symmetric and the number of firms is given exogenously. However the equivalence does not hold and taxes dominate quotas in the free entry market because quota can increases the number of entering firms and increases the loss caused by excessive entries.
ISSN:	0931-8658 1617-7134
DOI:	10.1007/s00712-013-0365-1