Based on product homogeneity and Cournot competition, a recurrent finding in the literature is that ad valorem taxation is welfare superior to unit taxation in noncompetitive markets. This paper first observes that with asymmetric costs inefficient firms are more likely to be inactive in...

Two results are shown about the free-entry equilibrium in a Cournot market with asymmetric firms and imperfectly substituting goods. First, only one technology will survive in the production of each good. Second, some good(s) may not be produced. Specifically, we show that in a two-good model...