Taxation and Incomplete Contracts

Simone Moriconi

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review


This paper analyzes the impact of taxation on economic efficiency when contracts are incomplete, firms operate in a perfect competitive market and can choose between integrated or non-integrated governance to cope with contract incompleteness. Taxation reduces incentives to pursue intrafirm coordination, thus the efficiency of firm’s production process under non-integration. This is not the case under integration, since production decisions are transferred to the Headquarters, at a fixed integration cost. Taxation may then induce firms to change their organization at the industry equilibrium. We show that a tax that induces firms to choose integration rather than non-integration may serve a corrective function if integration costs and market prices are not too high.
Lingua originaleEnglish
pagine (da-a)1-35
Numero di pagine35
RivistaQuaderni d'Istituto di Teoria Economia e Metodi Quantitativi
Stato di pubblicazionePubblicato - 2012


  • incomplete contracts
  • taxation


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