Social Efficiency of Market Entry Under Tax Policy-Reference-Cited by-同舟云学术

Social Efficiency of Market Entry Under Tax Policy

Published:2022-05-02 Issue:3 Volume:22 Page:601-610
ISSN:1935-1682
Container-title:The B.E. Journal of Economic Analysis & Policy
language:en
Short-container-title:

Author:

Basak Debasmita¹,Mukherjee Arijit²³⁴

Affiliation:

1. Nottingham University Business School , Nottingham , UK

2. CESifo , Munich , Germany

3. INFER , Cologne , Germany

4. GRU, City University of Hong Kong , Kowloon , Hong Kong

Abstract

Abstract We provide a new rationale for socially insufficient market entry. We show that if the shadow cost of public funds is sufficiently high, the number of firms under free entry can be socially insufficient if the tax policies are “time inconsistent”, so that the governments cannot commit to the tax policies before market entry of firms. Hence, strategic tax policies may provide a reason why policymakers should engage in pro-competitive policies. Lump-sum subsidies to firms may be a way to achieve that goal.

Publisher

Walter de Gruyter GmbH

Subject

Economics, Econometrics and Finance (miscellaneous),Economics and Econometrics

Link

https://www.degruyter.com/document/doi/10.1515/bejeap-2022-0012/pdf

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