Template-Type: ReDIF-Paper 1.0
Author-Name: Stefano Colombo
Author-X-Name-First: Stefano
Author-X-Name-Last: Colombo
Author-Email: stefano.colombo@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Title: Taxation and Predatory Prices in a Spatial Model 
Abstract: Using a spatial model with two separated markets, we study how taxation alters the
incentive to prey of an incumbent firm facing a potential entrance by another firm. We
show that for intermediate levels of the transportation costs, the higher are taxes the
lower are the expected gains from the predatory strategy. We also show that under
some conditions setting a positive level of taxes may induce a duopolistic equilibrium 
instead of a monopolistic one, and this ultimately increases welfare.
Length: 21
Creation-Date: 2010-03
File-URL: http://www.unicatt.it/Istituti/EconomiaFinanza/Quaderni/ief0092.pdf
File-Format: Application/pdf
File-Function: First version, 2010
Number: ief0092
Classification-JEL: D43; L11
Keywords: Taxation; Predation; Spatial model.
Handle: RePEc:ctc:serie3:ief0092