Extension of Long-Staehler’s Model on Optimal Export Tax in the Case of Privatization

This paper extends Long and Staehler’s model and studies optimal export tax in the case of privatization. The authors find that optimal export tax increases with the degree of privatization if product differentiation exists. The authors provide a counterexample to Long and Staehler’s model and reach a different conclusion. This finding emphasizes that the relationship between the variables of optimal export tax and conditions of asymmetric cost and product differentiation is quite different from Long and Staehler’s model. Since optimal export tax is endogenous in the model, the authors also consider the potential endogeneity of privatization decision, which is an important issue in a traditional mixed duopoly analysis.