Tourism tax, tourism boom and privatization in a mixed oligopoly

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This paper investigates the welfare effect of a tourism boom and a tourism tax in the context of imperfect competition. In particular, we characterize the welfare effects of a tourism boom and the optimal tourism tax rate, in the case of a standard Cournot oligopoly and the case of a mixed oligopoly in which a public firm and private firms compete. While the optimal tourism tax rate for the host country is given by a specific level in the case of private oligopoly, it is given by an arbitrary level that satisfies the profit maximization condition for private firms in the case of mixed oligopoly. In the case of private oligopoly, the welfare effect of a tourism boom is positive as long as the tourism tax is given by a non-negative level, but in the case of mixed oligopoly, the effect can be negative when the tourism tax is set at a low level and the private (public) firm’s share of output is sufficiently small (large) relative to the entire market.

収録刊行物

  • 経済学季報

    経済学季報 68 (4), 65-82, 2019-03-28

    立正大学経済学会

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