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Tacit Collusion under Destination - and Origin-Based Commodity Taxation

The paper employs a standard model of dynamic price competition to study how international principles of value-added taxation affect the stability of collusive agreements when producers in an international duopoly agree not to export into each other's home market and tax rates differ across countries. In this framework, tacit collusion may be more likely to break up under either the destination or the origin principle, depending on the relation between costs of production and market size. A robust result is that tax rate harmonization increases the likelihood of tacit collusion under both tax principles considered.

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File URL: http://cofe.uni-konstanz.de/Papers/dp99_17.pdf
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Paper provided by Center of Finance and Econometrics, University of Konstanz in its series CoFE Discussion Paper with number 99-17.

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Length: 31 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:knz:cofedp:9917
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  1. repec:cup:cbooks:9780521027922 is not listed on IDEAS
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