Intellectual Property Boxes and the Paradox of Price Discrimination

Ben Klemens
Additional contact information
Ben Klemens: U.S. Treasury

Working Papers from Council on Economic Policies

Abstract: This paper considers the methods by which some existing laws and proposals offer different tax rates to different types of capital, a scheme variously known as a patent box, innovation box, or intellectual property box (IP box). It presents a model of international tax competition—what tax experts call a race to the bottom and competition experts call Bertrand competition—with some capital fixed and some easily moved across borders. The model finds that the highest expected tax revenue from mobile IP for a country hosting a large amount of fixed, non-IP capital comes from assigning a single tax rate to all types of capital—that is, from not implementing an IP box. In the context of Bertrand competition, firms optimize revenue when not engaging in price discrimination across types of customers. As a research and development (R&D) credit, several examples show that the IP box is more easily manipulated than a traditional credit on R&D expenses.

Pages: 52 pages
Date: 2017-03
New Economics Papers: this item is included in nep-acc, nep-com, nep-ino, nep-ipr, nep-knm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cepweb.org/wp-content/uploads/2017/05/ ... e-Discrimination.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ceq:wpaper:1703

Access Statistics for this paper

More papers in Working Papers from Council on Economic Policies Contact information at EDIRC.
Bibliographic data for series maintained by Pierre Monnin ().