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Tacit Collusion under Destination- and Origin-Based Commodity Taxation

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  • Andreas Haufler
  • Guttorm Schjelderup

Abstract

The paper employs a standard model of dynamic price competition to study how international principles of value-added taxation affect the stability of collusive agreements when producers in an international duopoly agree not to export into each other's home market and tax rates differ across countries. In this framework, tacit collusion may be more likely to break up under either the destination or the origin principle, depending on the relation between costs of production and market size. A robust result is that tax rate harmonization increases the likelihood of tacit collusion under both tax principles considered.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-04/cesifo_wp283.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 283.

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Date of creation: 2000
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Handle: RePEc:ces:ceswps:_283

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Keywords: Commodity taxation; dynamic price competition;

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References

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Cited by:
  1. Schindler, Dirk & Schjelderup, Guttorm, 2007. "Harmonization of Corporate Tax Systems and its Effect on Collusive Behavior," Discussion Papers 2007/8, Department of Business and Management Science, Norwegian School of Economics.
  2. Haufler, Andreas & Schjelderup, Guttorm, 2004. "Tacit collusion and international commodity taxation," Munich Reprints in Economics 20417, University of Munich, Department of Economics.

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