Financing Elderly Care Service Subsidies horizontally differentiated duopoly

This paper presents consideration of how a subsidy for the elderly care services should be financed in terms of income growth and social welfare. An increase in the tax burden for older people and firm with a decrease in the tax burden for young people can raise the income growth rate. However, the policy to decrease the unemployment to increase tax revenue by virtue of an increase in labor input can raise the income growth rate if the unemployment rate is low. Even if these tax systems increase the income growth rate, social welfare can not always be pulled up because an increase in the tax burden for older people worsens the welfare of older people.