Working Paper Series, Department of Economics, Copenhagen Business School
Pascalis Raimondos-Møller and Nicolas Schmitt
Commodity Taxation and Parallel Imports
Abstract: We examine the interaction between commodity taxes and
parallel imports in a simple 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. Origin taxes are
shown to have very attractive properties: they lead to lower levels of
optimal taxes, they converge as parallel imports increase (while
destination taxes diverge), and they lead to higher welfare levels
Keywords: na; (follow links to similar papers)
JEL-Codes: G10; (follow links to similar papers)
22 pages, January 1, 2007
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