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Tacit Collusion under Destination- and Origin-Based Commodity Taxation

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  • Andreas Haufler
  • Guttorm Schjelderup

Abstract

The paper employs a standard model of dynamic price competition to study how international principles of value-added taxation affect the stability of collusive agreements when producers in an international duopoly agree not to export into each other's home market and tax rates differ across countries. In this framework, tacit collusion may be more likely to break up under either the destination or the origin principle, depending on the relation between costs of production and market size. A robust result is that tax rate harmonization increases the likelihood of tacit collusion under both tax principles considered.

Suggested Citation

  • Andreas Haufler & Guttorm Schjelderup, 2000. "Tacit Collusion under Destination- and Origin-Based Commodity Taxation," CESifo Working Paper Series 283, CESifo.
    • Handle: RePEc:ces:ceswps:_283
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    References listed on IDEAS

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    Cited by:

    1. Dirk Schindler & Guttorm Schjelderup, 2009. "Harmonization of Corporate Tax Systems and Its Effect on Collusive Behavior," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(4), pages 599-621, August.
    2. Haufler, Andreas & Schjelderup, Guttorm, 2004. "Tacit collusion and international commodity taxation," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 577-600, March.

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    More about this item

    Keywords

    Commodity taxation; dynamic price competition;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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