International Commodity-Tax Competition and Asymmetric Producer Prices

Yasar Sezer ()
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Yasar Sezer: 2112 Cardiff Business School, Cardiff University , Cardiff, CF10 3EU, UK

The B.E. Journal of Economic Analysis & Policy, 2025, vol. 25, issue 1, 59-98

Abstract: In this paper, I extend the seminal commodity-tax competition model of Kanbur and Keen (1993. “Jeux Sans Frontières: Tax Competition and Tax Coordination When Countries Differ in Size.” The American Economic Review 83: 877–92) letting asymmetric producer prices between countries of different sizes. Unlike Kanbur and Keen, I show that there are multiple equilibria, and at some equilibria, small-country consumers cross-shop from the large. Besides, tax harmonization can benefit the small country, and a minimum tax rate can decrease a country’s tax revenue.

Keywords: commodity-tax competition; cross-border shopping; asymmetric prices; tax harmonization; minimum tax rate (search for similar items in EconPapers)
JEL-codes: H20 H77 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejeap-2022-0332

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