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The Impact of a Goods and Services Tax on Product Market Competition
Author(s) -
Damania R.
Publication year - 2000
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.00163
Subject(s) - tacit collusion , oligopoly , ad valorem tax , business , product market , industrial organization , collusion , tax competition , goods and services , competition (biology) , economics , tax reform , microeconomics , commerce , market economy , welfare , ecology , biology , incentive
This paper explores the effects of a goods and services tax on the degree of competition in an oligopolistic industry and identifies a new mechanism through which the tax influences product market competition. The analysis focuses upon the effects of the tax in a concentrated industry and it is demonstrated that there exist circumstances under which the tax may promote competition by rendering tacit collusion more difficult.