A Simple Model of Commodity Taxation and Cross-Border Shopping
AbstractThis paper sets up a simple model in which two countries, differing in geographical extent, engage in commodity tax competition originating in opportunities for cross-border shopping. The non-cooperative tax equilibrium and various coordination initiatives are examined in the benchmark model and in two model extensions incorporating (i) costs of transportation for goods and (ii) border inspection. Among the more surprising results are the following: with (i), pure profits accrue to sellers near the border, but subjecting them to tax may lower the country's total tax revenue; with (ii), the volume of cross-border shopping may well increase. Copyright 2001 by The editors of the Scandinavian Journal of Economics.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 103 (2001)
Issue (Month): 4 (December)
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
Other versions of this item:
- Nielsen, Søren Bo, 1998. "A simple model of commodity taxation and cross-border shopping," Working Papers 13-1998, Copenhagen Business School, Department of Economics.
- Søren Bo Nielsen, . "A Simple Model of Commodity Taxation and Cross-Border Shopping," EPRU Working Paper Series 98-18, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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