Output Decisions as Strategic Complements or Substitutes in an Economy where Taxation of Private Sector Production Finances State Sector Losses

• Autorzy: Robert W. Elder
• Języki publikacji: EN

Abstrakty

EN

In the pages that follow, I explore what would happen if losses incurred in the state sector were financed by a tax paid by private firms on each unit of output they produce. This per-unit tax paid by private firms to finance state sector losses creates a relationship among private firms that leads them to view their output decisions as strategic complements. Thus, an initial decision by one private firm to produce more (due to an exogenous increase in demand for its product or due to a process innovation that lowers its marginal cost of production) will cause other private firms to increase their own output as they make their "best response" (the response consistent with profit-maximization) to the output increase by the initial private firm. The model discussed here also reveals private firm output decisions as strategic substitutes with state firm output decisions. So if a state-operated firm reduces production, the best response of private firms is to increase production. Once more, the per-unit tax is the variable through which the change in state output gets transmitted to private firms, inducing them to change their output in the opposite direction. (fragment of text)

Słowa kluczowe

EN

Taxation; Corporation strategies; Private sector; Public sector

PL

Opodatkowanie; Strategia przedsiębiorstwa; Sektor prywatny; Sektor publiczny

• Czasopismo: Emergo. Journal of Transforming Economies and Societies
• Rocznik: 2008
• Tom: 13
• Numer: nr 1
• Strony: 21--31

Twórcy

autor

Robert W. Elder

• Beloit College

Bibliografia

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