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Commodity taxation and regulatory competition

  • 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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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
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Handle: RePEc:cor:louvco:2012057
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  1. David Carey & Josette Rabesona, 2002. "Tax Ratios on Labour and Capital Income and on Consumption," OECD Economic Studies, OECD Publishing, vol. 2002(2), pages 129-174.
  2. Andreas Haufler & Michael Pflüger, 2004. "International Commodity Taxation under Monopolistic Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(3), pages 445-470, 08.
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  4. Mintz, J. & Tulkens, H., 1984. "Commodity tax competition between member states of a federation: equilibrium and efficiency," CORE Discussion Papers 1984027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Keith Head & Thierry Mayer & John Ries, 2011. "The erosion of colonial trade linkages after independence," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  6. Lockwood, Ben & Migali, Giuseppe, 2008. "Did the Single Market Cause Competition in Excise Taxes? Evidence from EU Countries," The Warwick Economics Research Paper Series (TWERPS) 847, University of Warwick, Department of Economics.
  7. Lockwood, B., 2000. "Tax Competition and Tax Co-Ordination Under Destination and Origin Principles: A Synthesis," The Warwick Economics Research Paper Series (TWERPS) 567, University of Warwick, Department of Economics.
  8. Devereux, Michael P. & Lockwood, Ben & Redoano, Michela, 2004. "Horizontal and Vertical Indirect Tax Competition: Theory and Some Evidence From the USA," CEPR Discussion Papers 4470, C.E.P.R. Discussion Papers.
  9. Paul Conway & Giuseppe Nicoletti, 2006. "Product Market Regulation in the Non-Manufacturing Sectors of OECD Countries: Measurement and Highlights," OECD Economics Department Working Papers 530, OECD Publishing.
  10. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Investment in the European Union," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 959-972, November.
  11. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1015-1049, August.
  12. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
  13. Wallace E. Oates, 2002. "Fiscal and Regulatory Competition: Theory and Evidence," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(4), pages 377-390, November.
  14. BEHRENS, Kristian & HAMILTON, Jonathan H. & OTTAVIANO, Gianmarco I.P. & THISSE, Jacques-François, . "Commodity tax harmonization and the location of industry," CORE Discussion Papers RP -1945, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
  16. Egger, Peter & Pfaffermayr, Michael & Winner, Hannes, 2005. "Commodity taxation in a 'linear' world: a spatial panel data approach," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 527-541, September.
  17. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-92, December.
  18. Andreas HaufLer & Guttorm Schjelderup & Frank Stähler, 2005. "Barriers to Trade and Imperfect Competition: The Choice of Commodity Tax Base," International Tax and Public Finance, Springer, vol. 12(3), pages 281-300, May.
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