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International oligopoly and the taxation of commerce with revenue-constrained governments

Author

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  • Haufler, Andreas
  • Pflüger, Michael

Abstract

We evaluate the incentives for strategic commodity tax-setting under destination and origin regimes when competition is imperfect and commodity taxes must be used to finance the government budget. Different cases of international duopoly are compared, where firms compete over quantities or prices and markets are segmented or integrated. In each setting the international spillovers of tax policy are isolated and evaluated at the Pareto-efficient tax rate. We find that origin-based commodity taxation leads to a downward competition of tax rates in each of the models analysed, whereas no similarly broad-based incentives for beggar-thy-neighbour policies exist under the destination principle.

Suggested Citation

  • Haufler, Andreas & Pflüger, Michael, 2007. "International oligopoly and the taxation of commerce with revenue-constrained governments," Munich Reprints in Economics 20424, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20424
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    Cited by:

    1. Ourania Karakosta, 2018. "Tax Competition in Vertically Differentiated Markets with Environmentally Conscious Consumers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(4), pages 693-711, April.
    2. Braun, Sebastian & Spielmann, Christian, 2012. "Wage subsidies and international trade: When does policy coordination pay?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 6, pages 1-42.
    3. Ourania Karakosta & Nikos Tsakiris, 2014. "Can tariff and tax reforms deliver welfare improvements under imperfect competition?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(3), pages 315-328, April.
    4. Gugl, Elisabeth & Zodrow, George R., 2019. "Tax Competition and the Efficiency of “Benefit-Related†Business Taxes," Working Papers 19-006, Rice University, Department of Economics.
    5. Simone Moriconi & Pierre M. Picard & Skerdilajda Zanaj, 2019. "Commodity taxation and regulatory competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 919-965, August.
    6. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2015. "Destination vs. Origin-based Commodity Taxation in Large Open Economies with Unemployment," CESifo Working Paper Series 5585, CESifo.
    7. Oliver Krebs & Michael Pflüger, 2018. "How deep is your love? A quantitative spatial analysis of the transatlantic trade partnership," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 171-222, February.
    8. Rizwan Ahmed & Fatima Yusuf & Maria Ishaque, 2024. "Green bonds as a bridge to the UN sustainable development goals on environment: A climate change empirical investigation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2428-2451, April.
    9. Elisabeth Gugl & George R. Zodrow, 2019. "Tax Competition and the Efficiency of “Benefit-related” Business Taxes," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 19, pages 571-596, World Scientific Publishing Co. Pte. Ltd..
    10. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2022. "Tax competition in the presence of environmental spillovers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(3), pages 600-626, June.
    11. Raimondos-Møller, Pascalis & Schmitt, Nicolas, 2010. "Commodity taxation and parallel imports," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 153-162, February.
    12. Behrens, Kristian & Hamilton, Jonathan H. & Ottaviano, Gianmarco I.P. & Thisse, Jacques-François, 2009. "Commodity tax competition and industry location under the destination and the origin principle," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 422-433, July.
    13. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2019. "Destination‐based vs. Origin‐based Commodity Taxation in Large Open Economies with Unemployment," Economica, London School of Economics and Political Science, vol. 86(341), pages 67-86, January.
    14. Moriconi, Simone & Sato, Yasuhiro, 2009. "International commodity taxation in the presence of unemployment," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 939-949, August.

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