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Maximum-revenue versus Optimum-welfare Export Taxes: a delegation game

Clarke, Roger and Collie, David Robert 2008. Maximum-revenue versus Optimum-welfare Export Taxes: a delegation game. Review of International Economics 16 (5) , pp. 919-929. 10.1111/j.1467-9396.2008.00757.x

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Abstract

In the Eaton and Grossman (1986) Bertrand duopoly model of strategic export taxes, both countries may be better off if they both delegate to policymakers who maximize tax revenue rather than welfare. However, both countries delegating to policymakers who maximize tax revenue is not a Nash equilibrium unless the degree of product substitutability is sufficiently high. For a wide range of values for the degree of product substitutability, the game is a prisoner's dilemma where both countries are better off delegating to policymakers who maximize tax revenue but both will delegate to policymakers who maximize welfare in the Nash equilibrium.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
H Social Sciences > HJ Public Finance
Publisher: Wiley-Blackwell
ISSN: 0965-7576
Last Modified: 04 Jun 2017 03:18
URI: http://orca.cf.ac.uk/id/eprint/19537

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