Scale Economies in Cross-Border Shopping and Commodity Taxation
A simple inventory theoretic model of cross-border shopping with transaction and storage costs is developed. Consumers incur fixed transaction and transportation costs to access the foreign market in which a perfect substitute of the domestic good is available. We show that the size of the optimal tax is inversely related to the size of domestic transactions. This result provides a simple example of a more general principle, that is, when there are increasing returns to scale in tax avoidance with respect to the quantities involved, then smaller transactions should be taxed more heavily than larger transactions. Copyright Kluwer Academic Publishers 1999
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Volume (Year): 6 (1999)
Issue (Month): 1 (February)
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- Harry Huizinga & Søren Bo Nielsen, "undated".
"The Taxation of Interest in Europe: A Minimum Withholding Tax?,"
EPRU Working Paper Series
97-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Huizinga, H.P. & Nielsen, S.B., 1997. "The taxation of interest in Europe : A minimum withholding tax?," Discussion Paper 1997-73, Tilburg University, Center for Economic Research.
- Haufler, Andreas, 1996.
"Tax Coordination with Different Preferences for Public Goods: Conflict or Harmony of Interest?,"
Munich Reprints in Economics
20392, University of Munich, Department of Economics.
- Andreas Haufler, 1996. "Tax coordination with different preferences for public goods: Conflict or harmony of interest?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(1), pages 5-28, January.
- Kanbur, Ravi & Keen, Michael, 1991. "Tax competition and tax coordination : when countries differ in size," Policy Research Working Paper Series 738, The World Bank.
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