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Commodity Tax Competition Under Destination and Origin Principles

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Lockwood, Ben

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Abstract

This paper studies the effect of switching from the destination to the origin principle of taxation on non-cooperative commodity tax equilibrium. When taxes are constrained to uniformity across commodities, the switch has no effect. When differentiated taxes are allowed, the effects of the switch depend on whether countries are small or large. In both cases the switch imposes the requirement that taxes must be uniform across commodities within each country. In the second case there are two further effects of the switch: (i) the introduction of negative spillover effects from tax policy; and (ii) a change in incentives to manipulate the terms of trade. The switch does not necessarily lead to a fall in all tax rates.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 733.

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Date of creation: Nov 1992
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Handle: RePEc:cpr:ceprdp:733

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Related research
Keywords: Border Controls; Customs Union; Destination and Origin Regimes; Tax Competition;

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Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
F15 - International Economics - - Trade - - - Economic Integration

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Walter Hettich & Stanley L. Winer, 2000. "Rules, Politics and the Normative Analysis of Taxation," Carleton Economic Papers 00-12, Carleton University, Department of Economics. [Downloadable!]
  2. Richard M. Bird & Pierre-Pascal Gendron, 2001. "VATs in Federal States: Experiences and Emerging Possibilities," International Studies Program Working Paper Series, at AYSPS, GSU paper0104, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  3. Andreas Haufler & Michael Pflueger, 2003. "Market Structure and the Taxation of International Trade," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Andreas Haufler & Guttorm Schjelderup & Frank Staehler, 2000. "Commodity Taxation and international Trade in Imperfect Markets," CoFE Discussion Paper 00-32, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]
    Other versions:
  5. Megan Khoshyaran, 2004. "Jeux sans frontières Revisited : A New Study of Tax Competition when Transportation Cost is Composite," Annales d'Economie et de Statistique, ADRES, issue 75-76, pages 04, Juillet-D. [Downloadable!]
  6. Andreas HaufLer & Guttorm Schjelderup & Frank Stähler, 2005. "Barriers to Trade and Imperfect Competition: The Choice of Commodity Tax Base," International Tax and Public Finance, Springer, vol. 12(3), pages 281-300, May. [Downloadable!] (restricted)
  7. Jørgen Aasness and Odd Erik Nygård, 2009. "Revenue functions and Dupuit curves for indirect taxes with cross-border shopping," Discussion Papers 573, Research Department of Statistics Norway. [Downloadable!]
  8. Michael Keen & David Wildasin, 2000. "Pareto Efficiency in International Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  9. Holmlund, Bertil & Kolm, Ann-Sofie, 1999. "Economic Integration, Imperfect Competition, and International Policy Coordination," Working Paper Series 1999:7, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  10. Ben Lockwood & David Meza & Gareth Myles, 1994. "When are origin and destination regimes equivalent?," International Tax and Public Finance, Springer, vol. 1(1), pages 5-24, February. [Downloadable!] (restricted)
  11. Miguel-Angel Lopez-Garcia, 1996. "The origin principle and the welfare gains from indirect tax harmonization," International Tax and Public Finance, Springer, vol. 3(1), pages 83-93, January. [Downloadable!] (restricted)
  12. John Fitz Gerald & Justin Johnston & James Williams, 1995. "Indirect Tax Distortions in a Europe of Shopkeepers," Papers WP056, Economic and Social Research Institute (ESRI). [Downloadable!]
  13. Michael Keen & David Wildasin, 2004. "Pareto-Efficient International Taxation," American Economic Review, American Economic Association, vol. 94(1), pages 259-275, March. [Downloadable!]
  14. Haufler, Andreas & Schjelderup, Guttorm, 2000. "Tacit Collusion under Destination- and Origin-Based Commodity Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  15. You-Qiang Wang, 1999. "Commodity Taxes under Fiscal Competition: Stackelberg Equilibrium and Optimality," American Economic Review, American Economic Association, vol. 89(4), pages 974-981, September. [Downloadable!] (restricted)
  16. Richard Bird & Pierre Gendron, 1998. "Dual VATs and Cross-Border Trade: Two Problems, One Solution?," International Tax and Public Finance, Springer, vol. 5(3), pages 429-442, July. [Downloadable!] (restricted)
  17. Amrita Dhillon & Myrna H. Wooders & Ben Zissimos, 2006. "Tax Competition Reconsidered," Working Papers 0602, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  18. Andreas Haufler, 1996. "Tax coordination with different preferences for public goods: Conflict or harmony of interest?," International Tax and Public Finance, Springer, vol. 3(1), pages 5-28, January. [Downloadable!] (restricted)
  19. Andreas Haufler & Michael Pflüger, 2003. "International Commodity Taxation under Monopolistic Competition," Discussion Papers of DIW Berlin 332, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
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