Indirect Tax Reforms and Public Goods under Imperfect Competition

Ourania Karakosta and Nikos Tsakiris ()
Authors registered in the RePEc Author Service: John G Sessions ()

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: This paper examines, within an imperfectly competitive environment with public goods, the welfare effects of three popular indirect tax reforms: i) a tariff cut combined with an equal increase in the consumption tax, ii) a tariff cut combined with an increase in the consumption tax that leaves consumer price unchanged, and iii) an export tax reduction combined with an equal increase in the production tax. It is shown that the welfare effects of these reforms are ambiguous, in that they depend on the strength of the consumers’ valuation of the public goods. This result contrasts existing results in the literature that ignores public goods provision.

Keywords: Tariff Reform; Tax Reform; Imperfect Competition; Public goods (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009-10
New Economics Papers: this item is included in nep-bec and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:5-2009

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