DeutschClear Cookie - decide language by browser settings
Haufler, Andreas; Pflüger, Michael (2003): International Commodity Taxation under Monopolistic Competition. Discussion papers / Deutsches Institut für Wirtschaftsforschung, 332
WarningThere is a more recent version of this item available.
Full text not available from 'Open Access LMU'.


We analyze non-cooperative commodity taxation in a two-country trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exactly offset each other and the non-cooperative tax equilibrium is Pareto efficient. With production-based taxation, however, there are additional externalities on the foreign tax base and the foreign price level which lead non-cooperative tax rates to exceed their Pareto efficient levels.

Available Versions of this Item