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International commodity taxation in the presence of unemployment


  • Moriconi, Simone
  • Sato, Yasuhiro


In this paper, we evaluate the impact of commodity tax competition on welfare and employment under the destination and origin principles, when the labor market is imperfectly competitive owing to a binding fixed wage. Our main finding is that commodity taxation causes an employment externality whose signs may be opposite under the two principles. While tax competition leads to inefficient tax rates under both principles, we also prove that the origin principle guarantees lower unemployment and higher welfare when the fixed wage is high. Finally, we show that the employment externality still exists in a standard union model of wage determination.

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  • Moriconi, Simone & Sato, Yasuhiro, 2009. "International commodity taxation in the presence of unemployment," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 939-949, August.
  • Handle: RePEc:eee:pubeco:v:93:y:2009:i:7-8:p:939-949

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    References listed on IDEAS

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    Cited by:

    1. Braun, Sebastian & Spielmann, Christian, 2012. "Wage subsidies and international trade: When does policy coordination pay?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-42.
    2. MORICONI, Simone & PICARD , Pierre M. & ZANAJ, Skerdilajda, 2012. "Commodity taxation and regulatory competition," CORE Discussion Papers 2012057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Aiura, Hiroshi & Ogawa, Hikaru, 2013. "Unit tax versus ad valorem tax: A tax competition model with cross-border shopping," Journal of Public Economics, Elsevier, vol. 105(C), pages 30-38.
    4. Moriconi, Simone & Sato, Yasuhiro, 2009. "International commodity taxation in the presence of unemployment," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 939-949, August.
    5. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2015. "Destination vs. Origin-based Commodity Taxation in Large Open Economies with Unemployment," CESifo Working Paper Series 5585, CESifo Group Munich.
    6. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2016. "On the Efficiency of Destination and Origin Commodity Taxation in the Presence of Consumption Generated Cross-Border Pollution," CESifo Working Paper Series 6221, CESifo Group Munich.

    More about this item


    Commodity taxation Destination principle Origin principle Unemployment Employment externality;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand


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