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Merger and entry-license tax

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  • Cato, Susumu
  • Matsumura, Toshihiro

Abstract

This paper investigates how horizontal mergers affect the optimal entry barrier (tax) in the presence of free entry and exit. We show that the government should raise the entry tax when a merger reduces the total number of firms entering.

Suggested Citation

  • Cato, Susumu & Matsumura, Toshihiro, 2013. "Merger and entry-license tax," Economics Letters, Elsevier, vol. 119(1), pages 11-13.
    • Handle: RePEc:eee:ecolet:v:119:y:2013:i:1:p:11-13
    DOI: 10.1016/j.econlet.2012.12.038
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    References listed on IDEAS

    as
    1. Davidson, Carl & Mukherjee, Arijit, 2007. "Horizontal mergers with free entry," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 157-172, February.
    2. Federico Etro, 2011. "Endogenous Market Structures And Strategic Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 63-84, February.
    3. Spector, David, 2003. "Horizontal mergers, entry, and efficiency defences," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1591-1600, December.
    4. Besley, Timothy, 1989. "Commodity taxation and imperfect competition : A note on the effects of entry," Journal of Public Economics, Elsevier, vol. 40(3), pages 359-367, December.
    5. Carl Davidson & Ben Ferrett, 2007. "Mergers in Multidimensional Competition," Economica, London School of Economics and Political Science, vol. 74(296), pages 695-712, November.
    6. Federico Etro, 2007. "Competition, Innovation, and Antitrust," Springer Books, Springer, number 978-3-540-49601-4, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lee, Sang-Ho & Matsumura, Toshihiro & Sato, Susumu, 2017. "A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications," MPRA Paper 76450, University Library of Munich, Germany.
    2. Matsumura, Toshihiro & Yamagishi, Atsushi, 2017. "Long-run welfare effect of energy conservation regulation," Economics Letters, Elsevier, vol. 154(C), pages 64-68.
    3. Susumu Cato & Toshihiro Matsumura, 2019. "Entry License Tax: Stackelberg versus Cournot," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 175(2), pages 258-271.
    4. Toshihiro Matsumura & Atsushi Yamagishi, 2017. "Lobbying for Regulation Reform by Industry Leaders," Journal of Regulatory Economics, Springer, vol. 52(1), pages 63-76, August.
    5. Matsumura, Toshihiro & Yamagishi, Atsushi, 2016. "Long-Run Evaluation of Cost-Reducing Public Infrastructure Investment," MPRA Paper 75625, University Library of Munich, Germany.
    6. Federico Etro, 2014. "Some thoughts on the Sutton approach," Journal of Economics, Springer, vol. 112(2), pages 99-113, June.

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    More about this item

    Keywords

    Merger; Free entry; Entry tax; Competition policy; Excess-entry theorem;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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