Preferential Taxation of E-Commerce: Imperfectly Competitive Retail Market and Trade Costs
Univ. of Aarhus Working Paper No. 2004-09
32 Pages Posted: 18 Jun 2008
Date Written: September 21, 2004
Abstract
E-commerce in physical goods enhances the degree of product market competition but leads also to higher trading costs as goods bought through the internet are shipped individually. Do these features of e-commerce support a case for granting preferential tax treatment to online shopping? This is investigated using a model with a domestic monopolistic retailer and foreign competitive producers that can either deliver a physical good to the retailer (ordinary trade) or directly to domestic consumers (e-commerce). Although it is possible to construct cases of strictly positive welfare effects the general result is that granting tax preferences to e-commerce will have ambiguous welfare consequences.
Keywords: E-commerce, imperfect competition, pro-competitive gains, trade diversion, commodity taxation
JEL Classification: H25, L12, F13
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Does the Internet Make Markets More Competitive?
By Jeffrey R. Brown and Austan Goolsbee
-
Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry
By Jeffrey R. Brown and Austan Goolsbee
-
Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets
By Michael R. Baye and John Morgan
-
Prices and Price Dispersion on the Web: Evidence from the Online Book Industry
By Karen Clay, Ramayya Krishnan, ...
-
Search, Obfuscation, and Price Elasticities on the Internet
By Glenn Ellison and Sara Fisher Ellison
-
Search, Obfuscation, and Price Elasticities on the Internet
By Glenn Ellison and Sara Fisher Ellison
-
Evidence on Learning and Network Externalities in the Diffusion of Home Computers
By Austan Goolsbee and Peter J. Klenow
-
In a World Without Borders: The Impact of Taxes on Internet Commerce
-
In a World Without Borders: the Impact of Taxes on Internet Commerce
-
Understanding Digital Markets: Review and Assesment
By Michael D. Smith, Joseph Bailey, ...