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Joint-Product Export Smuggling and Export Tax Policy

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  • Scott Fausti

Abstract

The effect of smuggling on tax revenue collection and the revenue-maximizing tax rate is an unresolved issue in the smuggling literature. Clandestine and joint-product smuggling models arrive at different conclusions concerning smuggling's effect on tax revenue collection and the revenue-maximizing tax rate. Clandestine (joint-product) smuggling is consistent with the assumption that legal and illegal trade are substitutable (complementary) activities for the exporting firm. The effect of smuggling on the tax rate and tax revenue is shown to be dependent on whether smuggling and legal trade are assumed to be complementary or substitutable activities. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • Scott Fausti, 1997. "Joint-Product Export Smuggling and Export Tax Policy," Open Economies Review, Springer, vol. 8(1), pages 51-69, January.
  • Handle: RePEc:kap:openec:v:8:y:1997:i:1:p:51-69
    DOI: 10.1023/A:1008293216735
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    File URL: http://hdl.handle.net/10.1023/A:1008293216735
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    References listed on IDEAS

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    1. Bhagwati, Jagdish & Srinivasan, T. N., 1973. "Smuggling and trade policy," Journal of Public Economics, Elsevier, vol. 2(4), pages 377-389.
    2. Jagdish Bhagwati & Bent Hansen, 1973. "A Theoretical Analysis of Smuggling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(2), pages 172-187.
    3. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, vol. 11(4), pages 447-458, November.
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    Cited by:

    1. Rafat MAHMOOD & Eatzaz AHMAD, 2015. "Measurement Of Import Smuggling In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(2), pages 135-159.

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