Economic integration and the choice of commodity tax base with endogenous market structures
AbstractThis paper analyzes the choice of commodity tax base when countries set their taxes non-cooperatively in a two-country symmetric reciprocal dumping model of intra-industry trade with free entry and trade costs. We show that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high or demand is linear. For lower levels of trade costs and nonlinear demand, the welfare ranking of the two tax bases is ambiguous. Hence, there is no clear preference for a tax principle with an ongoing movement towards closer economic integration.
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 17 (2010)
Issue (Month): 2 (April)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102915
Economic integration; Commodity taxation; Trade; Imperfect competition; Endogenous market structures; F12; H20;
Other versions of this item:
- Scott McCracken & Frank Staehler, 2007. "Economic integration and the choice of commodity tax base with endogenous market structures," Working Papers 0701, University of Otago, Department of Economics, revised Feb 2007.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
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