The Impact of Internet Sales Tax in a Search Model of Money: Some Analytical Results

Tiantian Dai, Shenyi Jiang, Xiangbo Liu () and Wen Wang ()
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Xiangbo Liu: Renmin University of China and International Monetary Institute (IMI)
Wen Wang: Department of Economics, Duke University

Annals of Economics and Finance, 2016, vol. 17, issue 1, 133-144

Abstract: We use a search-theoretic model to study the impact of internet sales taxes, in both lump-sum and proportional fashions. We show that both forms of taxes, especially the lump-sum tax, have real effects on the online market if the terms of trade are negotiable, while a proportional tax distorts the economy further. We then propose a preferential tax policy and show that it together with a lump-sum internet sales tax can recover the first best. We also give some policy suggestions.

Keywords: Internet sales tax; Policy implications (search for similar items in EconPapers)
JEL-codes: H25 L81 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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