Financing a Nationalized Monopoly: Coase's Versus Hotelling-Lerner's Solution

In 1946, Coase rejected Hotelling-Lerner's solution for financing a nationalized monopoly on the grounds that any tax structure could distort relative prices. In monopoly where two-part tariffs are infeasible, Coase suggested average cost pricing as a noninfenor solution to the above policy. This article shows that, in a general equilibrium model, it is possible to choose a distortionary Hotelling-Lerner's tax policy that is superior to average cost pricing.

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Year of publication:	1998
Authors:	Torregrosa, Ramón J.
Published in:	Public Finance Review. - Vol. 26.1998, 4, p. 392-405

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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