International Commodity Taxation Under Monopolistic Competition

Andreas Haufler and Michael Pflüger

No 529, CESifo Working Paper Series from CESifo

Abstract: We analyze non-cooperative commodity taxation in a symmetric two-country trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exactly offset each other and the non-cooperative tax equilibrium is Pareto efficient. With production-based taxation, however, there is an additional externality on the foreign price level which leads non-cooperative tax rates to exceed their Pareto efficient levels.

Keywords: tax competition; market imperfections; international; trade (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: International Commodity Taxation under Monopolistic Competition (2004)
Working Paper: International commodity taxation under monopolistic competition (2004)
Working Paper: International Commodity Taxation under Monopolistic Competition (2003)
Working Paper: International Commodity Taxation under Monopolistic Competition (2003)
Working Paper: International Commodity Taxation under Monopolistic Competition (2001)
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