TY  - JOUR
AU  - Metcalf,Gilbert E.
AU  - Norman,George
TI  - Oligopoly Deregulation in General Equilibrium: A Tax Neutralization Result
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9416
PY  - 2003
Y2  - January 2003
UR  - http://www.nber.org/papers/w9416
L1  - http://www.nber.org/papers/w9416.pdf
N1  - Author contact info:
Gilbert E. Metcalf
Room 3221
Department of the Treasury
Washington, DC 20220
1500 Pennsylvania Ave., NW
Tel: 202-622-0173
E-Mail: gilbert.metcalf@tufts.edu

George Norman
Tufts University
Department of Economics
Medford MA 02155
E-Mail: george.norman@tufts.edu
AB  - We examine the interplay between market structure and the form that commodity taxation should take in a general equilibrium model in which firms produce differentiated products and so are able to exert market power. Our analysis takes account of two important recent developments that affect market structure and so the appropriate design and effectiveness of commodity taxation: market deregulation and technological change. When market deregulation facilitates price discrimination, we find that tax policy is ineffective as a means to influence market structure. We further show that when tax rates are set optimally government is able to neutralize the potentially detrimental welfare impact of restrictive entry conditions in the differentiated product sector. Finally, we present conditions under which price discrimination is welfare improving.
ER  -