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Imperfect competition, indirect tax harmonization and public goods

Christos Kotsogiannis and Miguel-Angel Lopez-Garcia ()

International Tax and Public Finance, 2007, vol. 14, issue 2, 135-149

Abstract: This paper shows that the welfare implications of indirect tax harmonization in a two-country imperfectly competitive framework, are, in general, indeterminate in the presence of public goods: Both countries can be made either worse off or better off. This holds under both the destination and origin principles of taxation and is in sharp contrast to existing results where revenue effects are not present. A consequence of this indeterminacy is that a precise evaluation of tax-harmonizing policies under both tax regimes requires an explicit consideration of the underlying preferences for private and public goods as well as the oligopolistic sectors’ relative cost structures. Copyright Springer Science + Business Media, LLC 2007

Keywords: Origin principle; Destination principle; Indirect tax harmonization; Reform of commodity taxes; Public goods (search for similar items in EconPapers)
JEL-codes: H87 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Imperfect Competition, Indirect Tax Harmonization and Public Goods (2005) Downloads
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