From Internal Taxes to National Regulation: Evidence from a French Wine Tax Reform at the turn of the Twentieth Century

37 Pages Posted: 21 Aug 2010 Last revised: 17 Sep 2013

See all articles by Raphael Franck

Raphael Franck

Hebrew University of Jerusalem - Department of Economics

Noel D. Johnson

George Mason University - Department of Economics; George Mason University - Mercatus Center

John V. Nye

George Mason University - Department of Economics; Mercatus Center; National Research University Higher School of Economics

Date Written: June 13, 2012

Abstract

The growth of the modern regulatory state is often explained in terms of an unambiguous increase in regulation driven by the actions of central governments. Contrary to this traditional narrative, we argue that governments often strove to weaken the autarkic tendencies of regional laws, thereby promoting greater trade and a more integrated market. For this purpose, we focus on the wine industry in France at the turn of the twentieth century and take advantage of a quasi-natural experiment generated by a law implemented on 1 January 1901 which lowered and harmonized various local tax rates. We show that high internal taxes on wine, set by regional governments, discouraged trade and protected small producers. We then trace how the political response to this tax decrease led to increases in wine regulation.

Keywords: Regulation, State and Local Taxation, Markets

JEL Classification: H71, L51, K23, N43, R12

Suggested Citation

Franck, Raphael and Johnson, Noel D. and Nye, John V. C., From Internal Taxes to National Regulation: Evidence from a French Wine Tax Reform at the turn of the Twentieth Century (June 13, 2012). GMU Working Paper in Economics No. 10-21, Available at SSRN: https://ssrn.com/abstract=1661523 or http://dx.doi.org/10.2139/ssrn.1661523

Raphael Franck

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel

Noel D. Johnson (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

George Mason University - Mercatus Center

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

John V. C. Nye

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-4272 (Phone)

Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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