In this paper we consider the use of border adjustments to compensate exporters for domestic environmental taxes even when the environmental tax is imposed on an intermediate good. Although GATT/WTO rules allow for border adjustments, there has been little analysis of them. A model of successive oligopoly is used to consider the appropriate border adjustments since many industries where environmental excise taxes are applied can be characterised as imperfectly competitive. We show that the border adjustment currently allowed for in GATT/WTO rules is, under certain circumstances, likely to be too low to maintain the competitiveness of exporters. In some cases, an export tax would be justified.
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2003 Annual meeting, July 27-30, Montreal, Canada with number
21994.
Length: Date of creation: 2003 Date of revision: Handle: RePEc:ags:aaea03:21994
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Don Fullerton & Gilbert E. Metcalf, 2002.
"Tax Incidence,"
NBER Working Papers
8829, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Fullerton, Don & Metcalf, Gilbert E., 2002.
"Tax incidence,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872
Elsevier.
[Downloadable!] (restricted)
Dixit, Avinash K, 1986.
"Comparative Statics for Oligopoly,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
[Downloadable!] (restricted)
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