Arbeitspapier
Taxation and supplier networks: Evidence from India
Do tax systems distort firm-to-firm trade? This paper considers the effect of tax policy on supplier networks in a large developing economy, the state of West Bengal in India. Using administrative panel data on firms, including transaction data for 4.8 million supplier-client pairs, we first document substantial segmentation of supply chains between firms paying Value-Added Taxes (VAT) and non-VAT-paying firms. We then develop a model of firms' sourcing and tax decisions within supply chains to understand the mechanisms through which tax policy interacts with supply networks. The model predicts partial segmentation in equilibrium because of both supply-chain distortions (taxes affect how much firms trade with each other) and strategic complementarities in firms' decision to pay VAT. Finally, we test the model's predictions using variations over time within-firm and within supplier-client pairs. We find that the tax system distorts firms' sourcing decisions, and evidence of strategic complementarities in firms' tax choices within supplier networks. These two mechanisms explain a substantial share of the supply chain segmentation that we observe
- Language
-
Englisch
- Bibliographic citation
-
Series: IFS Working Papers ; No. W19/21
- Classification
-
Wirtschaft
- Event
-
Geistige Schöpfung
- (who)
-
Gadenne, Lucie
Nandi, Tushar K.
Rathelot, Roland
- Event
-
Veröffentlichung
- (who)
-
Institute for Fiscal Studies (IFS)
- (where)
-
London
- (when)
-
2019
- DOI
-
doi:10.1920/wp.ifs.2019.1921
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gadenne, Lucie
- Nandi, Tushar K.
- Rathelot, Roland
- Institute for Fiscal Studies (IFS)
Time of origin
- 2019
Other Objects (12)
Taxation and supplier networks: Evidence from India
Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers
Triads in Lean Management: Analyzing Buyer–Supplier-Supplier and Buyer–Supplier-Supplier’s Supplier Relationships for Zero-Defect Manufacturing
Supplier's Guide
Supplier's Guide
Supplier selection and contract enforcement: Evidence from performance bonding
Supplier dynamics in horticultural export chains: Evidence from Ecuador
Information technology in supplier networks : a theoretical approach to decisions about information technology and supplier relationship ; with 5 tables
Key supplier management
In-supplier versus out-supplier : Determinanten des Wechselverhaltens industrieller Nachfrager
Buyer-supplier contract length and the innovation of supplier firms
Reduction of India's Taxation. Salt Duty.
Taxation and supplier networks: Evidence from India
Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers
Triads in Lean Management: Analyzing Buyer–Supplier-Supplier and Buyer–Supplier-Supplier’s Supplier Relationships for Zero-Defect Manufacturing
Supplier's Guide
Supplier's Guide
Supplier selection and contract enforcement: Evidence from performance bonding
Supplier dynamics in horticultural export chains: Evidence from Ecuador
Information technology in supplier networks : a theoretical approach to decisions about information technology and supplier relationship ; with 5 tables
Key supplier management
In-supplier versus out-supplier : Determinanten des Wechselverhaltens industrieller Nachfrager
Buyer-supplier contract length and the innovation of supplier firms
Reduction of India's Taxation. Salt Duty.
Taxation and supplier networks: Evidence from India
Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers
Triads in Lean Management: Analyzing Buyer–Supplier-Supplier and Buyer–Supplier-Supplier’s Supplier Relationships for Zero-Defect Manufacturing
Supplier's Guide
Supplier's Guide
Supplier selection and contract enforcement: Evidence from performance bonding
Supplier dynamics in horticultural export chains: Evidence from Ecuador
Information technology in supplier networks : a theoretical approach to decisions about information technology and supplier relationship ; with 5 tables
Key supplier management
In-supplier versus out-supplier : Determinanten des Wechselverhaltens industrieller Nachfrager
Buyer-supplier contract length and the innovation of supplier firms