Commodity taxation and parallel imports

Pascalis Raimondos () and Nicolas Schmitt

Journal of Public Economics, 2010, vol. 94, issue 1-2, 153-162

Abstract: We examine the interaction between commodity taxes and parallel imports in a two-country model with imperfect competition. While governments determine non-cooperatively their commodity tax rate, the volume of parallel imports is determined endogenously by the retailing sector. We compare the positive and normative implications of having commodity taxes based on destination or origin principle. We show that, as the volume of parallel imports increases, non-cooperative origin taxes converge, while destination taxes diverge. Moreover, origin taxes are more similar and lead to higher aggregate welfare levels than destination taxes.

Keywords: Parallel; import; Commodity; taxation; Tax; harmonization (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Commodity Taxation and Parallel Imports (2007)
Working Paper: Commodity Taxation and Parallel Imports (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:94:y:2010:i:1-2:p:153-162

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