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Commodity taxation and regulatory competition

Author

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  • Simone Moriconi

    () (Universita Cattolica del Sacro Cuore & University of Luxembourg, CREA)

  • Pierre M. Picard

    () (University of Luxembourg, CREA & Université Catholique de Louvain, CORE)

  • Skerdilajda Zanaj

    () (University of Luxembourg, CREA)

Abstract

This paper studies competition in commodity taxation and product market regulation between trading partners. To explain the strategic interaction between governments and regulators, we present a two-country general equilibrium model in which destination-based commodity taxes finance public goods and product market regulation affects the number of firms in the market. We provide empirical evidence based on data for 21 OECD countries over the 1990-2008 period. Our results suggest that commodity taxation and product market regulation are interdependent policies. We confirm the absence of strategic interaction in commodity taxation between governments. Finally, we show that domestic regulation has a negative effect on domestic commodity taxation and that product market regulation is a strategic complement policy.

Suggested Citation

  • Simone Moriconi & Pierre M. Picard & Skerdilajda Zanaj, 2015. "Commodity taxation and regulatory competition," Working Papers 2015/26, Institut d'Economia de Barcelona (IEB).
  • Handle: RePEc:ieb:wpaper:doc2015-26
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    More about this item

    Keywords

    Regulation; commodity tax; strategic interactions;

    JEL classification:

    • F0 - International Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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