Commodity Taxation and Regulatory Competition

48 Pages Posted: 16 Mar 2017

See all articles by Simone Moriconi

Simone Moriconi

Catholic University of the Sacred Heart of Milan

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg

Skerdilajda Zanaj

Universite du Luxembourg

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Date Written: February 21, 2017

Abstract

This paper studies theoretically and empirically competition in commodity taxation and product market regulation between trading partner countries. We present a two-country general equilibrium model in which destination-based commodity taxes finance public goods, and product market regulation affects both the number of firms in the market and product diversity. We provide empirical evidence based on data for 21 OECD countries over the 1990-2008 period. Our results suggest that commodity taxation and product market regulation are interdependent policies. We find absence of strategic interaction in commodity taxation between governments. Furthermore, we show that domestic regulation has a negative effect on domestic commodity taxation. Finally, we demonstrate that product market regulation is a strategic complementary policy.

Keywords: regulation, commodity tax, strategic interactions

JEL Classification: F000, H100, H700, H870, L500

Suggested Citation

Moriconi, Simone and Picard, Pierre M. and Zanaj, Skerdilajda, Commodity Taxation and Regulatory Competition (February 21, 2017). CESifo Working Paper Series No. 6345, Available at SSRN: https://ssrn.com/abstract=2933426 or http://dx.doi.org/10.2139/ssrn.2933426

Simone Moriconi

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

Skerdilajda Zanaj (Contact Author)

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

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