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Economic integration and the choice of commodity tax base with endogenous market structures

McCracken, Scott; Stähler, Frank

Authors

Frank Stähler



Abstract

This paper analyzes the choice of commodity tax base when countries set their taxes noncooperatively in a two-country symmetric reciprocal dumping model of intraindustry trade with free entry and trade costs. We show that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high or demand is linear. For lower levels of trade costs and nonlinear demand, the welfare ranking of the two tax bases is ambiguous. Hence, there is no clear preference for a tax principle with an ongoing movement toward closer economic integration.

Citation

McCracken, S., & Stähler, F. (2010). Economic integration and the choice of commodity tax base with endogenous market structures. International tax and public finance, 17(2), 91-113. https://doi.org/10.1007/s10797-008-9099-3

Online Publication Date Jan 28, 2009
Publication Date 2010-04
Deposit Date Nov 13, 2014
Publicly Available Date Nov 13, 2014
Journal International tax and public finance
Print ISSN 0927-5940
Electronic ISSN 1573-6970
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 17
Issue 2
Pages 91-113
DOI https://doi.org/10.1007/s10797-008-9099-3
Keywords Economic integration, Commodity taxation, Trade, Imperfect competition, Endogenous market structures
Public URL https://hull-repository.worktribe.com/output/469412
Publisher URL http://link.springer.com/article/10.1007%2Fs10797-008-9099-3
Additional Information Author's accepted manuscript of article published in: International tax and public finance, 2010, v.17, issue 2. The final publication is available at Springer via http://dx.doi.org/10.1007/s10797-008-9099-3

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