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Optimal Corporation Tax: An I.O. Approach

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  • Luca Colombo
  • Paola Labrecciosa
  • Patrick Paul Walsh

Abstract

Theory predicts that optimal effective corporation tax rates will benegatively related to industry specific sunk costs, and hence industryconcentration. Governments should tax industries with monopolistic powersoftly. Evidence suggests that this Schumpeterian (1942) principle ofcorporate taxation was used widely across industries in France, Italy and theUK in the 1990s.

Suggested Citation

  • Luca Colombo & Paola Labrecciosa & Patrick Paul Walsh, 2006. "Optimal Corporation Tax: An I.O. Approach," STICERD - Economics of Industry Papers 42, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stieip:42
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    References listed on IDEAS

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    More about this item

    Keywords

    Effective Corporation Tax Rate; Industry Sunk Costs; Industry Concentration.;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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