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Title:International Commodity Taxation under Monopolistic Competition PDF Logo
Authors:Haufler, Andreas
Pflüger, Michael
Issue Date:2003
Series/Report no.:DIW-Diskussionspapiere 332
Abstract: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.
Subjects:tax competition
market imperfections
international trade
JEL:H87
H21
F12
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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