Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation
We examine the impact of political orientation on fiscal regulation and product differentiation within a spatial duopoly. Using a modelling approach a la Hotelling, we explore how the regulator’s political stance -whether pro-consumer or pro-business- affects market outcomes through distinct optimal...
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Faculty of Economics University of Rijeka
2024-12-01
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| Series: | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
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| Online Access: | https://www.efri.uniri.hr/upload/1/02-Hamoudi_et_al-2024-2.pdf |
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| author | Hamid Hamoudi Ana Belen Miquel Burgos Ourania Dimakou |
| author_facet | Hamid Hamoudi Ana Belen Miquel Burgos Ourania Dimakou |
| author_sort | Hamid Hamoudi |
| collection | DOAJ |
| description | We examine the impact of political orientation on fiscal regulation and product differentiation within a spatial duopoly. Using a modelling approach a la Hotelling, we explore how the regulator’s political stance -whether pro-consumer or pro-business- affects market outcomes through distinct optimal designs of fiscal intervention. We identify three regulatory profiles: (i) pro-consumer regulation with high tax rates leading to minimal product differentiation and lower prices; (ii) pro-business regulation with no taxation resulting in maximum product differentiation and higher prices, and (iii) moderate regulation, balancing the interests of firms and consumers, in which taxes can be moderate but the firms are not induced to follow the regulator’s designated levels of differentiation. Our findings highlight the significant role of political orientation in shaping market dynamics and regulatory effectiveness, emphasising the need to consider political factors and the balancing of various actors in policy design within spatial competition models. |
| format | Article |
| id | doaj-art-dd1370cc141b465ab15f5a64a12a1890 |
| institution | Kabale University |
| issn | 1331-8004 1846-7520 |
| language | deu |
| publishDate | 2024-12-01 |
| publisher | Faculty of Economics University of Rijeka |
| record_format | Article |
| series | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
| spelling | doaj-art-dd1370cc141b465ab15f5a64a12a18902025-01-29T11:35:40ZdeuFaculty of Economics University of RijekaZbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu1331-80041846-75202024-12-0142227930810.18045/zbefri.2024.2.6Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiationHamid Hamoudi0Ana Belen Miquel Burgos1Ourania Dimakou2Full Professor, Universidad Rey Juan Carlos, Fundamentos de Análisis Económico, Paseo de los Artilleros, 38, 28032 Madrid, Madrid, Spain. Scientific affiliation: microeconomics and general equilibrium, spatial competition, environmental microeconomics. E-mail: hamid.hamoudi@urjc.esAssistant Professor, Universidad Rey Juan Carlos, Fundamentos de Análisis Económico, Paseo de los Artilleros, 38, 28032 Madrid, Madrid, Spain. Scientific affiliation: welfare policies and eco-nomic wellbeing of societies, in-work poverty and gender economics, spatial competition. E-mail: anabelen.miquel@urjc.es.Assistant Professor, Universidad Rey Juan Carlos, Fundamentos de Análisis Económico, Paseo de los Artilleros, 38, 28032 Madrid, Madrid, Spain. Scientific affiliation: macroeconomic theories and policies, debt and central banking theories, public health policies, gender economics, spatial competition. E-mail: ourania.dimakou@urjc.esWe examine the impact of political orientation on fiscal regulation and product differentiation within a spatial duopoly. Using a modelling approach a la Hotelling, we explore how the regulator’s political stance -whether pro-consumer or pro-business- affects market outcomes through distinct optimal designs of fiscal intervention. We identify three regulatory profiles: (i) pro-consumer regulation with high tax rates leading to minimal product differentiation and lower prices; (ii) pro-business regulation with no taxation resulting in maximum product differentiation and higher prices, and (iii) moderate regulation, balancing the interests of firms and consumers, in which taxes can be moderate but the firms are not induced to follow the regulator’s designated levels of differentiation. Our findings highlight the significant role of political orientation in shaping market dynamics and regulatory effectiveness, emphasising the need to consider political factors and the balancing of various actors in policy design within spatial competition models.https://www.efri.uniri.hr/upload/1/02-Hamoudi_et_al-2024-2.pdfoptimal fiscal policyproduct differentiationregulation and political affiliation in oligopolistic setting |
| spellingShingle | Hamid Hamoudi Ana Belen Miquel Burgos Ourania Dimakou Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu optimal fiscal policy product differentiation regulation and political affiliation in oligopolistic setting |
| title | Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation |
| title_full | Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation |
| title_fullStr | Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation |
| title_full_unstemmed | Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation |
| title_short | Political considerations and fiscal regulation in a spatial duopoly: Effects on product differentiation |
| title_sort | political considerations and fiscal regulation in a spatial duopoly effects on product differentiation |
| topic | optimal fiscal policy product differentiation regulation and political affiliation in oligopolistic setting |
| url | https://www.efri.uniri.hr/upload/1/02-Hamoudi_et_al-2024-2.pdf |
| work_keys_str_mv | AT hamidhamoudi politicalconsiderationsandfiscalregulationinaspatialduopolyeffectsonproductdifferentiation AT anabelenmiquelburgos politicalconsiderationsandfiscalregulationinaspatialduopolyeffectsonproductdifferentiation AT ouraniadimakou politicalconsiderationsandfiscalregulationinaspatialduopolyeffectsonproductdifferentiation |