Indirect taxes in oligopoly in presence of licensing opportunities

Sen, Neelanjan and Biswas, Rajit (2014): Indirect taxes in oligopoly in presence of licensing opportunities.

Abstract

This paper considers the relative efficiency of unit tax and ad valorem tax in Cournot doupoly in the presence of licensing opportunities after the announcement of the tax rates by the government. Anderson et al. (2001) shows that in such a case ad valorem tax welfare dominates the unit tax. However, it ignores the licensing possibilities. Interestingly, it is shown in the present paper that in case of fixed-fee licensing unit tax sometimes dominates ad valorem tax. However, unit tax and ad valorem tax are equally efficient in case of royalty licensing.

• Item Type: MPRA Paper
• Language: English
• Keywords: Unit tax, Ad valorem tax, Cournot Competition, Licensing
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out ; Joint Ventures ; Technology Licensing

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