Market structure and the taxation of international trade

Haufler, Andreas and Pflüger, Michael (October 2003): Market structure and the taxation of international trade. Discussion Papers in Economics 2003-23

Abstract

The paper compares non-cooperative commodity taxation under the destination and origin principles under a variety of different assumptions about market structure. We consider a model of international duopoly with either quantity or price competition of firms and either segmented or integrated markets, and a monopolistic competition model with mobile firms. In each setting the international spillovers of tax policy are isolated and evaluated at the Pareto efficient tax rate. The sign of the net spillover, and thus the direction that commodity tax competition will take, depends critically on whether lump-sum taxes are available or commodity taxes must be used to finance the government budget.

• Item Type: Paper (Discussion Paper)
• Keywords: tax competition, market imperfections, international trade
• Subjects: Economics; Economics > Discussion Papers in Economics; Economics > Discussion Papers in Economics > International Trade; Economics > Discussion Papers in Economics > Public Finance
• Dewey Classification: 300 Social sciences; 300 Social sciences > 330 Wirtschaft
• Journal of Economic Literature classification: F12, H21, H87
• Language: English