Arbeitspapier

International Commodity Taxation under Monopolistic Competition

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We analyze non-cooperative commodity taxation in a 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 are additional externalities on the foreign tax base and the foreign price level which lead non-cooperative tax rates to exceed their Pareto efficient levels.

Language
Englisch

Bibliographic citation
Series: DIW Discussion Papers ; No. 332

Classification
Wirtschaft
International Fiscal Issues; International Public Goods
Taxation and Subsidies: Efficiency; Optimal Taxation
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Subject
tax competition
market imperfections
international trade
Verbrauchsteuer
Neue Aussenhandelstheorie
Ursprungslandprinzip
Nichtkooperatives Spiel
Steuerwettbewerb
Steuerwirkung
Pareto-Optimum
Theorie

Event
Geistige Schöpfung
(who)
Haufler, Andreas
Pflüger, Michael
Event
Veröffentlichung
(who)
Deutsches Institut für Wirtschaftsforschung (DIW)
(where)
Berlin
(when)
2003

Handle
Last update
10.03.2025, 11:43 AM CET

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Object type

  • Arbeitspapier

Associated

  • Haufler, Andreas
  • Pflüger, Michael
  • Deutsches Institut für Wirtschaftsforschung (DIW)

Time of origin

  • 2003

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