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Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition

Author

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  • Kenji Fujiwara

    () (School of Economics, Kwansei Gakuin University)

Abstract

We construct an exporting monopoly model to compare destination- and origin-based commodity taxes in a context of a trade and domestic tax reform. We show that an export tax reduction and a change in destination (resp. origin) tax that fix the world price is strictly Pareto-improving (resp. deteriorating), which holds whether markets are integrated or segmented. This result may provide a new rationale for preferring the destination-based consumption tax to the origin-based production tax that has been discussed in the literature of tax harmonization and tax competition.

Suggested Citation

  • Kenji Fujiwara, 2013. "Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition," Discussion Paper Series 112, School of Economics, Kwansei Gakuin University, revised Nov 2013.
  • Handle: RePEc:kgu:wpaper:112
    as

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    References listed on IDEAS

    as
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    6. Michael Keen & Jenny E. Ligthart, 2005. "Coordinating Tariff Reduction and Domestic Tax Reform under Imperfect Competition," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 385-390, May.
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    More about this item

    Keywords

    export tax; consumption tax; production tax; monopoly; strict Pareto improvement/deterioration;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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