Commodity Taxation and Parallel Imports

Nicolas Schmitt and Pascalis Raimondos ()

No 6580, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine the interaction between commodity taxes and parallel imports in a simple 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. Origin taxes are shown to have very attractive properties: they lead to lower levels of optimal taxes, they converge as parallel imports increase (while destination taxes diverge), and they lead to higher welfare levels.

Keywords: Commodity taxation; market integration; Parallel import (search for similar items in EconPapers)
JEL-codes: F12 F15 H21 H24 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-pbe
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Journal Article: Commodity taxation and parallel imports (2010)
Working Paper: Commodity Taxation and Parallel Imports (2007)
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