Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75859
Authors: 
Keen, Michael
Lahiri, Sajal
Raimondos-Møller, Pascalis
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 518
Abstract: 
This paper shows that under imperfect competition the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.
Subjects: 
Harmonization
destination principle
origin principle
commodity taxation
Document Type: 
Working Paper

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