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A simple model of commodity taxation and cross-border shopping

  • Nielsen, Søren Bo

    (Department of Economics, Copenhagen Business School)

This paper sets up a simple model of commodity taxation and cross-border shopping. Two countries, differing in geographical extent, engage in tax competition originating in the opportunities for cross-border shopping. Both tax competition and various coordination initiatives are examined. Then follow two extensions: (i) inclusion of costs of transportation for goods; (ii) inclusion of border inspection. These extensions allow us to conclude that both a drop in transportation costs and abolishment of border control intensify commodity tax competition and lower tax rates and revenues. The qualitative results for coordination measures also hold for the extended versions of our model.

(This abstract was borrowed from another version of this item.)

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File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7531
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Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 13-1998.

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Length: 22 pages
Date of creation: 01 Jan 1998
Date of revision:
Handle: RePEc:hhs:cbsnow:1998_013
Contact details of provider: Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 34 99
Web page: http://www.cbs.dk/departments/econ/
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