I will try to answer your question as best I can (I am about to go offline). From your description, it sounds like your dog has a case of fleas. Mange and most other types of mites can only be seen with a microscope. Also, the distribution of the lesions you are describing (around the tail base) is very consistent with fleas. The fact that he also has scabs and bleeding suggest that your dog may have an allergy to the flea saliva, causing a more severe skin reaction. There is also the chance that your dog has lice (they can also be seen with the naked eye
, but are very tiny, and usually you really have to look closely to see them). You can take a fine toothed comb through your dog's hair and spread the debris you collect on a paper towel, then put a bit of water on the black specks and roll them around. If they leave a brown streak, you've got fleas, and this "flea dirt" is the digested blood they've been feeding
As for treating fleas, I recommend using Advantage once a month for 3 months. I have not found the over the counter products available in pet stores to be very effective. In order to provide some immediate relief until this product has had time to kill the fleas, you can try giving your dog a bath using an oatmeal based shampoo. Leave the shampoo on for about 5 minutes, then rinse throughly and towel dry. This might help soothe the inflammed skin. Your veterinarian might also prescribe something for the itching to provide immediate relief if the dog is in a lot of discomfort. You may also want to consider deworming your dog, as fleas can transmit tapeworms to dogs (and humans!).
Good luck and I hope this information helps.
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The information in this post is not meant to be a diagnosis, and cannot take the place of a visit to your veterinarian.