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Optimal corporation tax: an I.O. approach

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  • Luca Colombo
  • Paola Labrecciosa
  • Patrick Paul Walsh

Abstract

Theory predicts that optimal effective corporation tax rates will be negatively related to industry specific sunk costs, and hence industry concentration. Governments should tax industries with monopolistic power softly. Evidence suggests that this Schumpeterian (1942) principle of corporate taxation was used widely across industries in France, Italy and the UK in the 1990s.

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File URL: http://eprints.lse.ac.uk/6719/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 6719.

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Length: 20 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:ehl:lserod:6719

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Keywords: Effective Corporation Tax Rate; Industry Sunk Costs; Industry Concentration;

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