VAT pass-through and competition: evidence from the Greek Islands

Lydia Dimitrakopoulou, Christos Genakos, Themistoklis Kampouris and Stella Papadokonstantaki

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we investigate how changes in VAT rates are passed through to consumers in islands with different market structure. We show that pass-through increases with competition, going from 50% in monopoly to around 80% in more competitive markets, but remains incomplete. We also discover a rapid rate of adjustment for VAT changes, as well as a positive relationship between competition and the rate of price adjustment. Finally, we document higher pass-through for products with more inelastic demand.

Keywords: pass-through; tax incidence; gasoline; value added tax (VAT); market structure; competition; Greek Islands (search for similar items in EconPapers)
Date: 2023-05-30
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: VAT pass-through and competition: Evidence from the Greek Islands (2023)
Working Paper: VAT Pass-Through and Competition: Evidence from the Greek Islands (2023)
Working Paper: VAT Pass-Through and Competition: Evidence from the Greek Islands (2023)
Working Paper: VAT pass-through and competition: evidence from the Greek Islands (2023)
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