The Role of Market Structure and Timing in Determining VAT Pass-Through
Matthieu Bellon
No 2021/061, IMF Working Papers from International Monetary Fund
Abstract:
We examine the role of market characteristics and timing in explaining observed heterogeneity in VAT pass-through. We first extend existing theory to characterize the roles of imperfect competition and product differentiation, then investigate these relationships empirically using a panel of 14 Eurozone countries between 1999 and 2013. We find important roles for product market regulation and product quality, and little impact of advance announcement of reforms. Our findings have important implications for policy-makers considering VAT rate adjustments, by illuminating which of the consumers or the producers would experience the brunt of a reform across different settings.
Keywords: Value added tax; Price effect; Pass through; Competition; Product Differentiation; pass-through heterogeneity; VAT pass-through; pass-through effect; baseline pass-through; elasticity coefficient; imperfect competition; pass-through adjustment; Value-added tax; Consumption; Commodity markets; Consumer prices; Europe (search for similar items in EconPapers)
Pages: 56
Date: 2021-03-05
New Economics Papers: this item is included in nep-com, nep-cwa, nep-eec, nep-pbe and nep-reg
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Citations: View citations in EconPapers (5)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2021/061
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