Scale economies in cross-border shopping and commodity taxation
UNSPECIFIED (1999) Scale economies in cross-border shopping and commodity taxation. INTERNATIONAL TAX AND PUBLIC FINANCE, 6 (1). pp. 89-99. ISSN 0927-5940Full text not available from this repository.
A simple inventory theoretic model of cross-border shopping with transaction and storage costs is developed. Consumers incur fixed transaction and transportation costs to access the foreign market in which a perfect substitute of the domestic good is available. We show that the size of the optimal tax is inversely related to the size of domestic transactions. This result provides a simple example of a more general principle, that is, when there are increasing returns to scale in tax avoidance with respect to the quantities involved, then smaller transactions should be taxed more heavily than larger transactions.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HC Economic History and Conditions|
|Journal or Publication Title:||INTERNATIONAL TAX AND PUBLIC FINANCE|
|Publisher:||KLUWER ACADEMIC PUBL|
|Number of Pages:||11|
|Page Range:||pp. 89-99|
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