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Tax Wedges and Mobile Capital

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  • Jones, Ronald W
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    Abstract

    An import tariff or an export tax drives a wedge between the domestic price of a traded good faced in one country and that in another. But what can be said about the price of the taxed good relative to the price of untaxed goods in two countries? The standard Lloyd Metzler and Abba Lerner potentiall y paradoxical answers to this question are reconsidered in a trading world where one kind of sector-specific capital is internationally mo bile. It is argued that there is a presumption that taxing trade in c ommodities tends to weaken the price (both domestically and in world markets) of the good which utilizes mobile capital. Copyright 1987 by The editors of the Scandinavian Journal of Economics.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

    Volume (Year): 89 (1987)
    Issue (Month): 3 ()
    Pages: 335-46

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    Handle: RePEc:bla:scandj:v:89:y:1987:i:3:p:335-46

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    Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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    Cited by:
    1. Chao, Chi-Chur & Yu, Eden S. H., 1998. "Export-share requirements, trade balances and welfare: a two-period analysis," Journal of Development Economics, Elsevier, vol. 56(1), pages 217-228, June.
    2. Anil Lal, 2001. "Goods and factors liberalization under increasing returns to scale," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(2), pages 115-131.

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