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Commodity Taxation and International Trade in Imperfect MarketsAndreas HauflerUniversity of Munich - Seminar for Economic Policy; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Guttorm SchjelderupNorwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Frank StählerUniversity of Tuebingen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Adelaide - School of Economics December 2000 CESifo Working Paper Series No. 376 Abstract: This paper studies non-cooperative commodity taxation in a trade model with imperfect competition and trade costs. Nationally optimal tax policy simultaneously tries to correct the domestic distortion from imperfect competition and to shift rents to the home country. Importantly, this trade-off depends qualitatively on the international commodity tax regime in operation. For low levels of trade costs, we show that production-based commodity taxes dominate from a global welfare perspective, but this ranking is reversed in favor of consumption-based taxation when trade costs become sufficiently high.
Number of Pages in PDF File: 33 Keywords: Commodity taxation, imperfect competition, strategic trade policy JEL Classification: F12, H20 working papers seriesDate posted: January 28, 2001Suggested CitationContact Information
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