The Economics of Duty-Free Shopping

35 Pages Posted: 20 Nov 2001

See all articles by Vidar Christiansen

Vidar Christiansen

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Stephen Smith

University College London - Department of Economics

Date Written: October 2001

Abstract

In 1999 the EU abolished duty-free on intra-EU travel, whilst other countries still retain duty-free shopping for international travellers. We address several aspects of duty-free trade, including effects on consumption, revenue and price-setting. From a global perspective we identify the distortions generated by duty-free trade. We review, and dismiss, various arguments that might conceivably support a role for duty-free in promoting global economic welfare. The existence of duty-free trade is explained as a phenomenon that individual countries find in their national self interest as seen both from the arrival and the departure end, i.e. countries have reasons both to admit duty-free goods and to permit their sale to departing passengers.

JEL Classification: H0

Suggested Citation

Christiansen, Vidar and Smith, Stephen, The Economics of Duty-Free Shopping (October 2001). Available at SSRN: https://ssrn.com/abstract=289080

Vidar Christiansen (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
011-47-22-855121 (Phone)
011-47-22-855035 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Stephen Smith

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
44-171-504 5882 (Phone)

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