Optimal Corporation Tax: An I.O. Approach

Colombo, Luca; Labrecciosa, Paola; Walsh, Patrick Paul

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Optimal Corporation Tax: An I.O. Approach

LSE STICERD Research Paper No. EI42

22 Pages Posted: 11 Jul 2008

See all articles by Luca Colombo

Luca Colombo

Trinity College (Dublin) - Institute for International Integration Studies (IIIS)

Patrick Paul Walsh

UCD; Institute for the Study of Labor (IZA)

There are 2 versions of this paper

Date Written: February 2006

Abstract

Theory predicts that optimal effective corporation tax rates will be negatively related to industry specific sunk costs, and hence industry concentration. Governments should tax industries with monopolistic power softly. Evidence suggests that this Schumpeterian (1942) principle of corporate taxation was used widely across industries in France, Italy and the UK in the 1990s.

JEL Classification: H25, and, L52

Suggested Citation: Suggested Citation

Colombo, Luca and Labrecciosa, Paola and Walsh, Patrick Paul, Optimal Corporation Tax: An I.O. Approach (February 2006). LSE STICERD Research Paper No. EI42, Available at SSRN: https://ssrn.com/abstract=1158319