Abstract
1. Dasgupta and Stiglitz [1] have recently discussed the optimum taxation of profits accruing to firms under diminishing returns to scale, and the implications for optimum commodity taxation and public production. Their main theorem asserts that, when the rents of different producers can be taxed at different rates, production efficiency is desirable. In the analysis of commodity taxation and public production by Diamond and myself [2] it was assumed that constant returns prevailed in the private sector, and we had supposed that productive efficiency would not usually be desirable when this assumption was violated. It may therefore be interesting to see how the new result can be obtained by the methods of our paper. In this way, I hope that it may be easier to understand the reason for their result. It also appears that one, possibly important, modification must be made in it. The final theorem has a quite unusual form.
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