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This paper examines the output effect of an ad-valorem tax of undifferentiated oligopolistic firms in the Weber-Moses triangle.Â It shows that an increase in the ad-valorem tax will increase each firmâ€™s output but may increase the number of firms and total output of firms if the inverse demand function is linear, concave or not too convex. This result is different from the well-known Tanakaâ€™s result in non-spatial economy. It indicates that oligopolistic firmâ€™s location decision has important influence on the output effect of the ad-valorem tax.Â

A note on location and the output effect of ad-valorem taxes under free entry oligopoly