Gains from Trade in Tax Revenue and the Efficiency Case for Trade Taxes
The paper analyses the gains from trade in distortionary tax revenue between countries, focussing on the case where lump-sum reveue transfers are restricted. In this case, trade taxes can be used to transfer government revenue between countries, and such taxes will typically be used in Pareto-efficient international equilibria. Global production efficiency conditions are often, though not always, satisfied at Pareto-efficient allocations involving trade taxes, but the implications for international taxation differ from those that have been put forward on the basis of the Diamond-mirrlees production efficiency theorem.
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- Alan J. Auerbach, 1982.
"The Theory of Excess Burden and Optimal Taxation,"
NBER Working Papers
1025, National Bureau of Economic Research, Inc.
- Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
- Michael Keen & David E. Wildasin, 2001.
"Pareto Efficiency in International Taxation,"
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