Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109071
Authors: 
Azacis, Helmuts
Collie, David R.
Year of Publication: 
2014
Series/Report no.: 
Cardiff Economics Working Papers E2014/15
Abstract: 
Assuming constant marginal cost, it is shown that a switch from specific to ad valorem taxation has no effect on the critical discount factor required to sustain collusion. This result is shown to hold for Cournot oligopoly as well as for Bertrand oligopoly when collusion is sustained with Nash-reversion strategies or optimal-punishment strategies. In a Cournot duopoly model with linear demand and quadratic costs, it is shown that the critical discount factor is lower with an ad valorem tax than with a specific tax. However, in contrast to Colombo and Labrecciosa (2013), it is shown that revenue is always higher with an ad valorem tax than with a specific tax.
Subjects: 
Taxes
Imperfect Competition
Oligopoly
Cartel
Supergame
JEL: 
H21
H22
L13
L41
C72
C73
Document Type: 
Working Paper

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