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| Author: | Moriconi, S. Sato, Y. |
| Title: | International commodity taxation in the presence of unemployment |
| Journal: | Journal of Public Economics
2009 : AUG, VOL. 93:7-8, p. 939-949 |
| Index terms: | international commodities taxation employment unemployment labour markets models |
| Language: | eng |
| Abstract: | This paper evaluates the impact of commodity tax competition (herein as: t-c.) on welfare and employment under the destination and origin principles with the labour market being imperfectly competitive due to a binding fixed wage. It is found that commodity taxation causes an employment externality the signs of which may be opposite under the two principles. While t-c. leads to inefficient tax rates under both principles, it is also proved that the origin principle guarantees lower unemployment and higher welfare when the fixed wage is high. Finally, the employment externality is shown to still exist in a standard union model of wage determination. |
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