Long-Run Effects of Tax Policies in a Mixed Market - 10.1628/001522113X666944 - Mohr Siebeck
Economics

Susumu Cato, Toshihiro Matsumura

Long-Run Effects of Tax Policies in a Mixed Market

Section: Articles
FinanzArchiv (FA)

Volume 69 () / Issue 2, pp. 215-240 (26)

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The purpose of this paper is to provide a systematic treatment of tax policies in mixed markets with endogenous entry. We consider three types of tax-subsidy policies: a simple unit subsidy, an entry-license tax, and a policy mixture of the two instruments. Under the unit-subsidy policy, in contrast to the results of the short-run analysis with exogenous entry, the optimal subsidy level in a mixed market is not higher than that in a private market, and privatization affects welfare. Under the entry-license-tax policy, the optimal entry-tax level in a mixed market is lower than that in a private market. Finally, we show that the privatization neutrality theorem holds under a two-part tax--subsidy policy: the first-best outcome is achieved in both mixed and private markets, and the optimal tax-subsidy rate is the same across the two regimes.
Authors/Editors

Susumu Cato No current data available.

Toshihiro Matsumura No current data available.