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Tax Principles and Tariff-Tax Reforms under International Oligopoly

Author

Listed:
  • Kenji Fujiwara

    () (School of Economics, Kwansei Gakuin University)

Abstract

This paper, in a two-country duopoly model, compares destination- and origin-based commodity taxes in a context of a unilateral tariff-tax reform that fixes the world price and foreign welfare. We find that the proposed reform reduces domestic welfare, and hence is strictly Pareto-deteriorating under the destination principle while the opposite holds under the origin principle. Moreover, it is shown that this ranking is reversed if exports are taxed. In short, which is preferable between destination and origin taxation depends on the tax principle and which between imports and exports are taxed.

Suggested Citation

  • Kenji Fujiwara, 2014. "Tax Principles and Tariff-Tax Reforms under International Oligopoly," Discussion Paper Series 116, School of Economics, Kwansei Gakuin University, revised Mar 2014.
  • Handle: RePEc:kgu:wpaper:116
    as

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    File URL: http://192.218.163.163/RePEc/pdf/kgdp116.pdf
    File Function: First version, 2014
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    tax principles; tariff-tax reform; destination-based consumption tax; origin-based production tax;

    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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