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Barriers to Trade and Imperfect Competition: The Choice of Commodity Tax Base

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Author Info

  • Andreas HaufLer

    ()

  • Guttorm Schjelderup

    ()

  • Frank Stähler

    ()

Abstract

Recent work has started to analyze the choice of international commodity tax base under conditions of imperfect competition. This paper focuses on the effects of changing levels of trade barriers in a model where firms engage in duopoly competition and governments set commodity taxes non-cooperatively. It is shown that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high, but the ranking of the two tax bases is reversed for low levels of trade costs. We conclude that the case for origin-based commodity taxes becomes stronger when barriers to trade fall. Copyright Springer Science + Business Media, Inc. 2005

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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 12 (2005)
Issue (Month): 3 (May)
Pages: 281-300

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Handle: RePEc:kap:itaxpf:v:12:y:2005:i:3:p:281-300

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Web page: http://www.springerlink.com/link.asp?id=102915

Related research

Keywords: commodity taxation; imperfect competition; strategic trade policy;

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References

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  14. Haufler, Andreas & Schjelderup, Guttorm, 2004. "Tacit collusion and international commodity taxation," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 577-600, March.
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