Destination- Versus Origin-Based Commodity Taxation and the Location of Industry
33 Pages Posted: 14 Dec 2004
Date Written: October 2004
Abstract
This Paper studies the positive aspects of destination vs. origin principles of commodity taxation as well as tax harmonization, with an emphasis on the international implications of these measures when firms are mobile. We investigate the tax incidence of these two principles on price levels and uncover how taxes and trade costs interact. While under the destination principle an increase in the tax rate of a country always causes some firms to relocate to the other, this effect may get reversed under the origin principle when economic integration is deep enough, so that a tax increase leads to an inflow of capital.
Keywords: Commodity tax, origin principle, destination principle, tax harmonization, home market effect
JEL Classification: F12, H22, H87, R12
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Empirics of Agglomeration and Trade
By Keith Head and Thierry Mayer
-
Market Access, Economic Geography, and Comparative Advantage: an Empirical Assessment
-
Economic Geography and Regional Production Structure: An Empirical Investigation
-
Economic Geography and Reginal Production Structure: An Empirical Investigation
-
The Home Market Effect and Bilateral Trade Patterns
By Gordon H. Hanson and Chong Xiang
-
On the Pervasiveness of Home Market Effects
By Keith Head, Thierry Mayer, ...
-
On the Pervasiveness of Home Market Effects
By Keith Head, Thierry Mayer, ...