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Commodity taxation and international trade in imperfect markets

Haufler, Andreas; Schjelderup, Guttorm; Stähler, Frank
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URI
http://hdl.handle.net/11250/164863
Date
2000-12
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  • Reports (SNF) [542]
Abstract
This paper studies non-cooperative commodity taxation in a trade model with imperfect competition and trade costs. Nationally optimal tax policy simultaneously tries to correct the domestic distortion from imperfect competition and to shift rents to the home country. Importantly, this trade-off depends qualitatively on the international commodity tax regime in operation. For low levels of trade costs, we show that production-based commodity taxes dominate from a global welfare perspective, but this ranking is reversed in favour of consumption-based taxation when trade costs become sufficiently high.
Publisher
SNF
Series
Report
2000:78

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