Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330098 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 15 [Issue:] 4 [Article No.:] 29 [Year:] 2024 [Pages:] 1-26
Publisher: 
MDPI, Basel
Abstract: 
This paper extends the Cournot duopoly model by allowing the government to impose firm-dependent specific taxes or subsidies while keeping the budget balanced. It considers two possible government goals: maximizing the social surplus and maximizing the consumer surplus. It shows that, with identical firms, the best government policy is not to intervene. In the case of cost asymmetry, social surplus and consumer surplus maximization goals require opposite strategies: to maximize the social surplus, the government should tax the high-cost firm driving the economy toward monopoly and increasing productive efficiency at the expense of lower production. In the case of consumer surplus maximization, the tax should be imposed on the low-cost firm reducing the gap between the firms' outputs. Such a strategy, however, increases productive inefficiency and reduces the social surplus.
Subjects: 
Cournot
oligopoly
specific tax
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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