Photo Gagnie Pascal Yebarth

GAGNIE PASCAL YEBARTH

JEUNES DOCTEURS ET ATER

Research group

    Comportements, Droits et Bien-être

HAL open science

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2025-34

On Taxation Policy in Strategic Bilateral Exchange: A review

Gagnie Pascal Yebarth

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Abstract
This paper provides a comprehensive review of the literature on tax policy within the framework of strategic market games (SMG). We refer to a simple prototype of SMGs called bilateral oligopoly models. The review reveals that the effects and effectiveness of redistributive tax policies depend on the preferences of individuals who behave strategically in trade. A crucial element of this analysis is the influence of strategic interactions on the price formation mechanism and, therefore, on the optimality of a tax-and-transfer policy to improve allocation efficiency. Then, we connect our findings to broader discussions in the literature, specifically regarding the effects of taxation on general and partial equilibrium (tax incidence: ad valorem versus per unit taxes; optimal taxation and market power; market imperfections, strategic interactions, and taxation). Although the comparison remains conceptually complicated, we show the complementarity of the diverse literature.
Mot(s) clé(s)
Imperfect competition, Market power, Strategic market game, Tax policy.
2024-19

Pareto-Optimal Taxation Mechanism in Noncooperative Strategic Bilateral Exchange

Ludovic A. Julien, Gagnie Pascal Yebarth

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Abstract
This paper explores the possibility that a taxation mechanism always implements a Pareto-optimal allocation in bilateral exchange when the market participants behave strategically and noncooperatively. To this end, we reconsider the taxation mechanism, namely the endowment taxation with transfers, implemented in the strategic bilateral exchange models by Gabszewicz and Grazzini (JPET, 1999). In this framework of strategic bilateral exchange, we consider a general class of smooth utility functions, and we determine the conditions under which the taxation mechanism is Pareto-optimal, i.e., whether there exists an equilibrium tax such that endowment taxation with transfers always implements a Pareto-optimal allocation. Furthermore, we explain why this taxation mechanism could implement a Pareto-optimal allocation.
Mot(s) clé(s)
Cournot-Nash equilibrium, Pareto-optimality, taxation
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