Commodity taxation and parallel imports

Raimondos-Møller, Pascalis & Schmitt, N. (2010) Commodity taxation and parallel imports. Journal of Public Economics, 94(1-2), pp. 153-162.

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We examine the interaction between commodity taxes and parallel imports in a two-country model with imperfect competition. While governments determine non-cooperatively their commodity tax rate, the volume of parallel imports is determined endogenously by the retailing sector. We compare the positive and normative implications of having commodity taxes based on destination or origin principle. We show that, as the volume of parallel imports increases, non-cooperative origin taxes converge, while destination taxes diverge. Moreover, origin taxes are more similar and lead to higher aggregate welfare levels than destination taxes.

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3 citations in Web of Science®

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ID Code: 94011
Item Type: Journal Article
Refereed: Yes
DOI: 10.1016/j.jpubeco.2009.09.007
ISSN: 0047-2727
Copyright Owner: Copyright 2010 Elsevier BV
Deposited On: 22 Mar 2016 05:02
Last Modified: 23 Mar 2016 05:06

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