International Commodity Taxation under Monopolistic Competition

Andreas Haufler and Michael Pflüger
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Michael Pflüger: University of Freiburg and IZA

No 108, Departmental Discussion Papers from University of Goettingen, Department of Economics

Abstract: We analyze non-cooperative commodity taxation in a symmetric two- country trade model characterized by monopolistic competition and inter- national 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 equi- librium is Pareto efficient. With production-based taxation, however, there is an additional externality on the foreign price level which leads non-cooperative tax rates to exceed their Pareto efficient levels.

Keywords: tax competition; market imperfections; international trade (search for similar items in EconPapers)
JEL-codes: F12 H21 H87 (search for similar items in EconPapers)
Pages: 26
Date: 2001-06-01
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (6)

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http://www2.vwl.wiso.uni-goettingen.de/departmentpaper/NO_108.pdf (application/pdf)

Related works:
Journal Article: International Commodity Taxation under Monopolistic Competition (2004)
Working Paper: International commodity taxation under monopolistic competition (2004)
Working Paper: International Commodity Taxation under Monopolistic Competition (2003)
Working Paper: International Commodity Taxation under Monopolistic Competition (2003)
Working Paper: International Commodity Taxation Under Monopolistic Competition (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:got:vwldps:108

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