Horizontal merger under strategic tax policy

Liu, Chih-Chen; Mukherjee, Arijit; Wang, Leonard F.S.

Abstract

In a Cournot oligopoly with consumption externality, we show that the presence of a strategic tax policy increases the incentive for a horizontal merger compared to the situation with no tax policy. Thus, we point towards a new factor, viz., strategic tax policy, for increasing the incentive for a horizontal merger that has been ignored in the existing literature. In contrast to the usual belief, we also show that a horizontal merger may benefit the consumers and increase social welfare.

Citation

Liu, C.-C., Mukherjee, A., & Wang, L. F. (2015). Horizontal merger under strategic tax policy. Economics Letters, 136, 184-186. https://doi.org/10.1016/j.econlet.2015.09.032

• Journal Article Type: Article
• Acceptance Date: Sep 25, 2015
• Online Publication Date: Oct 9, 2015
• Publication Date: Nov 30, 2015
• Deposit Date: Jun 18, 2018
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 136
• Pages: 184-186
• DOI: https://doi.org/10.1016/j.econlet.2015.09.032
• Public URL: https://nottingham-repository.worktribe.com/output/1105914
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0165176515003900?via%3Dihub