Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/170631 
Year of Publication: 
2015
Series/Report no.: 
Working Paper No. 34
Publisher: 
Università Cattolica del Sacro Cuore, Dipartimento di Economia e Finanza (DISCE), Milano
Abstract: 
This paper studies competition in commodity taxation and product market regula- tion between trading partner countries. We present a two-country general equilibrium model in which destination-based commodity taxes finance public goods, and prod- uct market regulation affects both the number of firms in the market and product diversity. We provide empirical evidence based on data for 21 OECD countries over the 1990-2008 period. Our results suggest that commodity taxation and product mar- ket regulation are interdependent policies. Theoretically and empirically we find an absence of strategic interaction in commodity taxation between governments. Further- more, we show that domestic regulation has a negative effect on domestic commodity taxation. Finally, we demonstrate theoretically and show empirically that product market regulation is a strategic complementary policy.
Subjects: 
Regulation
commodity tax
strategic interactions
JEL: 
F0
H1
H7
H87
L5
Document Type: 
Working Paper

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