Optimal Corporation Tax: An I.O. Approach

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Optimal Corporation Tax: An I.O. Approach

Author Info

Luca Colombo
Paola Labrecciosa
Patrick Paul Walsh

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Patrick Paul Walsh

Abstract

Theory predicts that optimal effective corporation tax rates will benegatively related to industry specific sunk costs, and hence industryconcentration. Governments should tax industries with monopolistic powersoftly. Evidence suggests that this Schumpeterian (1942) principle ofcorporate taxation was used widely across industries in France, Italy and theUK in the 1990s.

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Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economics of Industry Papers with number 42.

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Date of creation: Feb 2006
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Handle: RePEc:cep:stieip:42

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Paper
- Luca Colombo & Paola Labrecciosa & Patrick Paul Walsh, 2005. "Optimal Corporation Tax: An I.O. Approach," The Institute for International Integration Studies Discussion Paper Series iiisdp97, IIIS. [Downloadable!]

Find related papers by JEL classification:
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-02-26 (All new papers)
NEP-BEC-2006-02-26 (Business Economics)
NEP-PBE-2006-02-26 (Public Economics)
NEP-PUB-2006-02-26 (Public Finance)

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