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Commodity taxation and parallel imports

Listed author(s):
  • Raimondos-Møller, Pascalis
  • Schmitt, Nicolas

We examine the interaction between commodity taxes and parallel imports in a two-country model with imperfect competition. While governments determine non-cooperatively their commodity tax rate, the volume of parallel imports is determined endogenously by the retailing sector. We compare the positive and normative implications of having commodity taxes based on destination or origin principle. We show that, as the volume of parallel imports increases, non-cooperative origin taxes converge, while destination taxes diverge. Moreover, origin taxes are more similar and lead to higher aggregate welfare levels than destination taxes.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(09)00115-7
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 1-2 (February)
Pages: 153-162

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Handle: RePEc:eee:pubeco:v:94:y:2010:i:1-2:p:153-162
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  10. Haufler, Andreas & Pflüger, Michael, 2007. "International oligopoly and the taxation of commerce with revenue-constrained governments," Munich Reprints in Economics 20424, University of Munich, Department of Economics.
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  14. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
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