Optimal Tourism Tax and Partial Privatization in a Mixed Oligopoly

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  • 混合寡占市場における最適な観光税と部分民営化

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Abstract

This study examines the optimal tourism tax in which a partially privatized public firm and private firms compete in a mixed oligopoly market. A tourism service produced by these firms is consumed by foreign as well as domestic tourists, and a government imposes a tax on the consumption of the tourism service. We show that the level of the tourism tax that maximizes the host country’s welfare depends on the fraction of foreign tourists, the degree of privatization of the public firm, and the number of firms operating in the market. In particular, for a sufficiently higher fraction of foreign tourists, a higher degree of privatization of the public firm, and a larger number of firms in the market, the optimal tourism tax rate can be shown to be positive. Furthermore, it is shown that the optimal tourism tax rate will increase as (a) the fraction of foreign tourists rises, (b) the privatization of the public firm progresses, and (c) the number of firms in the market increases.

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