NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Oligopoly Deregulation and the Taxation of Commodities

Gilbert E. Metcalf, George Norman

NBER Working Paper No. 9415
Issued in January 2003
NBER Program(s):   PE

We examine the interplay between market structure and the form that commodity taxation should take in a world in which firms produce differentiated products and so are able to exert some degree of market power. Our analysis takes explicit account of two important recent developments that carry significant implications for market structure and so for the appropriate design and effectiveness of commodity taxation: market deregulation and technological change. In the presence of price discrimination, we find that tax policy loses much of its effectiveness at serving as a substitute for direct regulation. Moreover, in cases where taxes can influence market structure, subsides rather than taxes may be required to achieve optimum market structure.

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Document Object Identifier (DOI): 10.3386/w9415

Published: Metcalf Gilbert E. & Norman George, 2003. "Oligopoly Deregulation and the Taxation of Commodities," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-18, October.

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