In 1946, Coase rejected Hotelling-Lerner's solution for financing a nationalized monopoly on the grounds that any tax structure could distort relative prices. In monopoly where two-part tariffs are infeasible, Coase suggested average cost pricing as a noninfenor solution to the above policy....

. This paper explores the effect of a tax reform which shifts from specific to value added taxation in a general equilibrium model with imperfect competition (both Cournot and Free Entry Oligopoly). Such tax reform is characterized through a rate of substitution between taxes. This...