Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84973
Authors: 
Kessing, Sebastian G.
Koldert, Bernhard
Year of Publication: 
2012
Series/Report no.: 
Volkswirtschaftliche Diskussionsbeiträge, Universität Siegen, Fachbereich Wirtschaftswissenschaften Wirtschaftsinformatik und Wirtschaftsrecht 158-12
Abstract: 
We introduce cross-border shopping and indirect tax competition into a model of optimal taxation. The Atkinson-Stiglitz result that indirect taxation cannot improve the efficiency of information-constrained tax-transfer policies, and that indirect taxes should not be differentiated across goods, is shown to hold in this case. This result is derived for symmetric as well as for asymmetric countries. However, if the tax system must contain elements of indirect taxation, differentiated indirect tax rates arise in the equilibrium and restricting differentiated indirect taxation can be welfare-increasing.
Subjects: 
cross-border shopping
Atkinson-Stiglitz theorem
tax competition
direct and indirect taxes
JEL: 
H21
F15
Document Type: 
Working Paper

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