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Market Structure and the Taxation of International Trade

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  • Andreas Haufler
  • Michael Pflüger

Abstract

The paper compares non-cooperative commodity taxation under the destination and origin principles under a variety of different assumptions about market structure. We consider a model of international duopoly with either quantity or price competition of firms and either segmented or integrated markets, and a monopolistic competition model with mobile firms. In each setting the international spillovers of tax policy are isolated and evaluated at the Pareto efficient tax rate. The sign of the net spillover, and thus the direction that commodity tax com- petition will take, depends critically on whether lump-sum taxes are available or commodity taxes must be used to finance the government budget.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40778.de/dp370.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 370.

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Length: 39 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp370

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Related research

Keywords: tax competition; market imperfections; international trade;

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References

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  1. James A. Brander, 1995. "Strategic Trade Policy," NBER Working Papers 5020, National Bureau of Economic Research, Inc.
  2. Baldwin, Richard E. & Venables, Anthony J., 1995. "Regional economic integration," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 31, pages 1597-1644 Elsevier.
  3. Cheng, Leonard K, 1988. "Assisting Domestic Industries under International Oligopoly: The Relevance of the Nature of Competition to Optimal Policies," American Economic Review, American Economic Association, vol. 78(4), pages 746-58, September.
  4. Michael Keen & Sajal Lahiri, 1994. "The comparison between destination and origin principles under imperfect competition," IFS Working Papers W94/08, Institute for Fiscal Studies.
  5. Haufler, Andreas & Schjelderup, Guttorm, 2004. "Tacit collusion and international commodity taxation," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 577-600, March.
  6. Pfluger, Michael & Andreas Haufler, 2003. "International Commodity Taxation under Monopolistic Competition," Royal Economic Society Annual Conference 2003 165, Royal Economic Society.
  7. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
  8. Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 1998. "Lectures on International Trade, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522470, December.
  9. Wilson, J.D., 1990. "Tax Competition With Interregional Differences In Factor Endowments," Working Papers 4, John Deutsch Institute for the Study of Economic Policy.
  10. Ravi Kanbur & Michael Keen, 1991. "Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size," Working Papers 819, Queen's University, Department of Economics.
  11. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  12. Mikesell, John L., 2000. "Remote Vendors and American Sales and Use Taxation: The Balance between Fixing the Problem and Fixing the Tax," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1273-86, December.
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  19. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
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  23. Janeba, Eckhard, 1998. "Tax competition in imperfectly competitive markets," Journal of International Economics, Elsevier, vol. 44(1), pages 135-153, February.
  24. Pfluger, Michael, 2001. " Ecological Dumping under Monopolistic Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 689-706, December.
  25. Sijbren Cnossen, 1998. "Global Trends and Issues in Value Added Taxation," International Tax and Public Finance, Springer, vol. 5(3), pages 399-428, July.
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Cited by:
  1. MORICONI, Simone & SATO, Yasuhiro, 2006. "International commodity taxation in the presence of unemployment," CORE Discussion Papers 2006069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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