Tax Principles and Coordination of Trade and Domestic Policies Under Imperfect Competition

Kenji Fujiwara ()

Australian Economic Papers, 2014, vol. 53, issue 1-2, 29-40

Abstract: type="main">

We construct an exporting monopoly model to compare destination- and origin-based commodity taxes in a context of a trade and domestic tax reform. We show that an export tax reduction and a change in destination (resp. origin) tax that fix the world price is strictly Pareto-improving (resp. deteriorating), which holds whether markets are integrated or segmented. This result may provide a new rationale for preferring the destination-based consumption tax to the origin-based production tax that has been discussed in the literature of tax harmonisation and tax competition.

Date: 2014
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Working Paper: Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition (2013)
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