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Optimal corporation tax: an I.O. approach

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  • Colombo, Luca
  • Labrecciosa, Paola
  • Walsh, Patrick Paul

Abstract

Theory predicts that optimal effective corporation tax rates will be negatively related to industry specific sunk costs, and hence industry concentration. Governments should tax industries with monopolistic power softly. Evidence suggests that this Schumpeterian (1942) principle of corporate taxation was used widely across industries in France, Italy and the UK in the 1990s.

Suggested Citation

  • Colombo, Luca & Labrecciosa, Paola & Walsh, Patrick Paul, 2006. "Optimal corporation tax: an I.O. approach," LSE Research Online Documents on Economics 6719, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:6719
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    More about this item

    Keywords

    Effective Corporation Tax Rate; Industry Sunk Costs; Industry Concentration;
    All these keywords.

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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