Tacit Collusion under Destination- and Origin-Based Commodity Taxation

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Tacit Collusion under Destination- and Origin-Based Commodity Taxation

Author Info

Haufler, A.
Schjelderup, G.

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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. If costs of production are zero, international tax differentials reduce support for collusive agreements under the destination, but not under the origin principle. When positive costs of production are introduced, however, the ranking of the two tax principles becomes ambiguous. We also show that tax harmonization - taken to imply an increase in the VAT rate of the low-tax country - increases the likelihood of tacit collusion under both the destination principle and the origin principle.

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Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 8/99.

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Length: 31 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:norgee:8/99

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Paper
- 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!]
- Andreas Haufler & Guttorm Schielderup, 1999. "Tacit Collusion under Destination - and Origin-Based Commodity Taxation," CoFE Discussion Paper 99-17, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]

Find related papers by JEL classification:
H7 - Public Economics - - State and Local Government; Intergovernmental Relations
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

References listed on IDEAS
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(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.)

Schindler, Dirk & Schjelderup, Guttorm, 2007. "Harmonization of Corporate Tax Systems and its Effect on Collusive Behavior," Discussion Papers 2007/8, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
Other versions:
- Dirk Schindler & Guttorm Schjelderup, 2009. "Harmonization of Corporate Tax Systems and Its Effect on Collusive Behavior," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(4), pages 599-621, 08. [Downloadable!] (restricted)

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