Tax Policy, Location Choices, and Market Structure
AbstractA structural model of entry and fiscal policy is presented. It shows that taxation of variable production costs can increase product prices, lower competition, and reduce the availability of new products in small markets. The model’s test is based on a unique nationwide fiscal experiment. We study the effects of the 1869 stamped paper tax reform act on the market for daily newspapers in the Netherlands. The econometric analysis uses data on when and where the newspapers existed and were introduced together with demographic census data from 1859 and 1869. The results confirm the model’s predictions and show how taxation affects strategic business location decisions.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 499.
Length: 38 pages
Date of creation: May 2002
Date of revision:
Publication status: published in: Journal of Law and Economics, 2003, 46 (1), 61-84
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Other versions of this item:
- Pfann, Gerard A & van Kranenburg, Hans, 2003. "Tax Policy, Location Choices, and Market Structure," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 61-83, April.
- Pfann, Gerard A. & Kranenburg, Hans van, 2003. "Tax policy, location choices, and market structure," Open Access publications from Maastricht University urn:nbn:nl:ui:27-4912, Maastricht University.
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-06-13 (All new papers)
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