- Volume 13, Number 1 (2025)
THE PRICE OF PARADISE: TAX INCENTIVES AND TOURISM ALONG ITALY’S COASTS
Sophie Maria Hofer
This paper investigates how tourism taxes are used by municipalities to attract tourists. We analyze how municipalities compete among each other, explicitly accounting for the spatial dimension. This paper provides a novel contribution to the literature on tax competition by explicitly modeling and testing the spatial dimension. First, we present a spatial model of tax competition, which is an adoption of the Hoteling model of imperfect competition in the linear city. We find that tax rates are strategic complements, as a change in taxes of one town will lead to a similar change of tax rates in neighboring towns. Second,...
THE COMPETITIVE EFFECTS OF INPUT PRICE DISCRIMINATION UNDER HORIZONTAL SHAREHOLDING
Kenta Hiroshi Yamamoto
Price discrimination has substantial social and policy implications and has received attention in the literature. However, prior research on input price discrimination has primarily been limited to single-input situations. We explore the strategic desirability of uniform pricing and contribute to the growing literature on perfectly complementary inputs in vertical markets. We consider a vertically related market in which two symmetric upstream firms provide perfectly complementary inputs for two downstream manufacturers, one of which has a non-controlling interest in its rival. Each upstream firm can choose between two pricing regimes: discriminatory or uniform. This study shows that although uniform pricing limits...
THE ROLE OF SWITCHING COSTS IN SHAPING PERSONALIZED PRICING STRATEGIES
Daichi Kenta Mori
Behavior-based price discrimination is a pricing strategy frequently observed in membership-based services and it has been studied widely in the literature. This paper considers a two-period behavior-based price discrimination model in which there are two distinct types of consumers with different demands, and a common switching cost is incurred for all customers who switch firms in the second period, regardless of customer type. We assume that firms accepting the switching customers bear the switching cost because they aim to attract customers from rival firms. As switching costs increase, competition for higher-demand customers intensifies. Eventually, in the second period, firms stop...
INCOME EFFECTS AND CONSUMER DEMAND IN THE ERA OF PRIVATIZATION
Lorenzo Matteo Bianchi
The question raised in this paper is whether and how some core features of income distribution, e.g. the income levels or income inequality, should be relevant in the decision to privatize public firms. The paper provides a first answer in the framework of mixed oligopoly theory. In particular, we show that the scope for privatization is widened when the market is poorer, and when incomes become more concentrated. These unexpected results are accounted for in terms of the way distributional shocks alter the allocative inefficiency of imperfectly competitive markets