Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101760
Authors: 
Haufler, Andreas
Year of Publication: 
1994
Series/Report no.: 
Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 234
Abstract: 
The paper analyzes the implications of allowing for trade deflection under the restricted origin principle. It is shown that (a) producer trade deflection leads to circular trade and must be ruled out to obtain a trade equilibrium, (b) consumer trade deflection will not occur in a Nash equilibrium when transaction costs are linear (zero) and tax rates are endogenized, (c) with strictly convex transaction costs model results do not differ qualitatively from those obtained in the absence of trade deflection. Together, these results give some theoretical support for the no cross-hauling assumption typically used in multi-country trade modelling.
Subjects: 
tax differentials
cross-hauling
JEL: 
F15
H73
Document Type: 
Working Paper

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