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Cross Ownership Under Strategic Tax Policy

Author

Listed:
  • Can Gökhan

    (Università Cattolica del Sacro Cuore, Milano, Italy)

  • Mukherjee Arijit

    (Nottingham University Business School, Nottingham, UK)

Abstract

We provide a new reason for the consumer surplus and welfare raising cross ownership. We show that cross ownership reduces the tax rate, and increases consumer surplus and welfare under Cournot and Bertrand competition when the marginal social cost/benefit of public funds is less than unity. We further show that Cournot competition creates higher consumer surplus and welfare compared to Bertrand competition if the marginal social cost/benefit of public funds is less than unity, thus providing a new reason for the Cournot-Bertrand welfare reversal.

Suggested Citation

  • Can Gökhan & Mukherjee Arijit, 2025. "Cross Ownership Under Strategic Tax Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 25(1), pages 115-125.
    • Handle: RePEc:bpj:bejeap:v:25:y:2025:i:1:p:115-125:n:1002
    DOI: 10.1515/bejeap-2024-0051
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    References listed on IDEAS

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    More about this item

    Keywords

    Bertrand; Cournot; cross ownership; strategic tax policy;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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