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Commodity taxation and regulatory competition

Listed author(s):
  • MORICONI, Simone

    ()

    (Catholic University Milan, ITEMQ, Italy; University of Luxembourg, CREA)

  • PICARD , Pierre M.

    ()

    (University of Luxembourg, CREA; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • ZANAJ, Skerdilajda

    ()

    (University of Luxembourg, CREA)

This paper studies competition in regulation and commodity taxation between trading countries. We present a general equilibrium model in which destination based consumption taxes finance public goods, while regulation of entry determines the number of firms in the markets. We find (i) no strategic interaction in commodity taxes; (ii) regulation leads to lower commodity tax rates if demand for public goods is more sensitive to income than demand for private goods and (iii) regulation policy is a strategically complement instrument if consumers do not over value product diversity. In the empirical part of the paper, we test our predictions using panel data for 21 OECD countries over the period 1990-2008.

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File URL: http://uclouvain.be/cps/ucl/doc/core/documents/coredp2012_57web.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2012057.

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Date of creation: 31 Dec 2012
Handle: RePEc:cor:louvco:2012057
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