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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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  17. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-92, September.
  18. Bernd Genser & Andreas Haufler & Peter Birch Soerensen, . "Indirect Taxation in an Integrated Europe. Is there a Way of Avoiding Trade Distortions Without Sacrificing National Tax Autonomy?," EPRU Working Paper Series 93-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  19. Steen, Frode & Sorgard, Lars, 1999. "Semicollusion in the Norwegian cement market," European Economic Review, Elsevier, vol. 43(9), pages 1775-1796, October.
  20. Siebert, Horst & Koop, Michael J, 1993. "Institutional Competition versus Centralization: Quo Vadis Europe?," Oxford Review of Economic Policy, Oxford University Press, vol. 9(1), pages 15-30, Spring.
  21. Julio J. Rotemberg & Garth Saloner, 1989. "Tariffs vs Quotas with Implicit Collusion," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 237-44, May.
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  23. Guttorm Schjelderup & Lars Sorgard, 1997. "Transfer Pricing as a Strategic Device for Decentralized Multinationals," International Tax and Public Finance, Springer, vol. 4(3), pages 277-290, July.
  24. Edwards, Jeremy & Keen, Michael, 1996. "Tax competition and Leviathan," European Economic Review, Elsevier, vol. 40(1), pages 113-134, January.
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  26. Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June.
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  28. Sijbren Cnossen, 1998. "Global Trends and Issues in Value Added Taxation," International Tax and Public Finance, Springer, vol. 5(3), pages 399-428, July.
  29. Margaret E. Slade, 1995. "Empirical Games: The Oligopoly Case," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 368-402, May.
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