Cross-Border Shopping and the Atkinson-Stiglitz Theorem

Sebastian Kessing and Bernhard Koldert ()

Volkswirtschaftliche Diskussionsbeiträge from Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht

Abstract: We introduce cross-border shopping and indirect tax competition into a model of optimal taxation. The Atkinson-Stiglitz result that indirect taxation cannot improve the effciency of information-constrained tax-transfer policies, and that indirect taxes should not be differentiated across goods, is shown to hold in this case. This result is derived for symmetric as well as for asymmetric countries. However, if the tax system must contain elements of indirect taxation, differentiated indirect tax rates arise in the equilibrium and restricting differentiated indirect taxation can be welfare-increasing.

Keywords: Cross-border shopping; Atkinson-Stiglitz theorem; tax competition; direct and indirect taxes (search for similar items in EconPapers)
JEL-codes: F15 H21 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012
New Economics Papers: this item is included in nep-acc and nep-pbe
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http://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/158-12.pdf (application/pdf)

Related works:
Journal Article: Cross-border shopping and the Atkinson–Stiglitz theorem (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:sie:siegen:158-12

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