Abstract

AbstractHaving a monopoly that is not owned domestically affects a country's income redistribution policies. Assume the government uses lump‐sum taxes to redistribute but cannot regulate the monopolist's price. In many relevant circumstances, a social planner would not equate social marginal utilities of income across individuals. Thus, using aggregate welfare functions as the preferences of a single representative consumer is valid only under restrictive circumstances. The monopolist always prefers to set price before the social planner chooses transfers, while the social planner may not have a first‐mover advantage. Under endogenous timing of their decisions, the government never moves before the monopolist.

Full Text
Paper version not known

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.