- Author
- Elder Robert W. (Beloit College)
- Title
- Output Decisions as Strategic Complements or Substitutes in an Economy where Taxation of Private Sector Production Finances State Sector Losses
- Source
- Emergo. Journal of Transforming Economies and Societies, 2008, vol. 13, no. 1, s. 21-31, rys., bibliogr. 6 poz.
- Keyword
- Opodatkowanie, Sektor prywatny, Sektor publiczny, Strategia przedsiębiorstwa
Taxation, Private sector, Public sector, Corporation strategies - Abstract
- In the pages that follow, I explore what would happen if losses incurred in the state sector were financed by a tax paid by private firms on each unit of output they produce. This per-unit tax paid by private firms to finance state sector losses creates a relationship among private firms that leads them to view their output decisions as strategic complements. Thus, an initial decision by one private firm to produce more (due to an exogenous increase in demand for its product or due to a process innovation that lowers its marginal cost of production) will cause other private firms to increase their own output as they make their "best response" (the response consistent with profit-maximization) to the output increase by the initial private firm. The model discussed here also reveals private firm output decisions as strategic substitutes with state firm output decisions. So if a state-operated firm reduces production, the best response of private firms is to increase production. Once more, the per-unit tax is the variable through which the change in state output gets transmitted to private firms, inducing them to change their output in the opposite direction. (fragment of text)
- Accessibility
- The Main Library of the Cracow University of Economics
The Library of Warsaw School of Economics
The Main Library of Poznań University of Economics and Business - Bibliography
-
- Cooper, R. (1999) Coordination Games. Cambridge, UK: Cambridge University Press
- Cooper, R. and John, A. (1988) "Coordinating Coordination Failures in Keynesian Models". Quarterly Journal of Economics 103: 441-63
- Cooper, R. and Ross, T. (1997) "Market Fragility and Guarantee Funds: Fundamental and Strategic Uncertainty". ISP Discussion Paper No. 49, revised
- Diamond, P. and Dybvig, P. (1983) "Bank Runs, Deposit Insurance and Liquidity". Journal of Political Economy 91: 401-19
- Eaton, J. (1987) "Public Debt Guarantees and Private Capital Flight". World Bank Economic Review. 377-95
- Persson, T. and Tabellini, G. (1990) Macroeconomic Policy, Credibility and Politics. London: Harwood
- Cited by
- ISSN
- 1233-3115
- Language
- eng
