In a small open economy composed of unionised international Cournot-Nash duopolies, a self-interested government has unilateral incentives to set higher specific domestic excise duties under the destination principle when the typical foreign firm is dominant and the import-competing sector is small. Excise taxes may emerge in political equilibrium when domestic firms and unions lobby for protection and the government is unable to use alternative protective policies because of international agreements. In so far as the government is prepared to exchange tax revenues for political contributions, under some conditions the excise tax rate will be higher than the one chosen without lobbying.
Protective excise taxation / M. Santoni. - In: JOURNAL OF INDUSTRY, COMPETITION AND TRADE. - ISSN 1573-7012. - (2017 Mar). [Epub ahead of print]
Protective excise taxation
M. Santoni
2017
Abstract
In a small open economy composed of unionised international Cournot-Nash duopolies, a self-interested government has unilateral incentives to set higher specific domestic excise duties under the destination principle when the typical foreign firm is dominant and the import-competing sector is small. Excise taxes may emerge in political equilibrium when domestic firms and unions lobby for protection and the government is unable to use alternative protective policies because of international agreements. In so far as the government is prepared to exchange tax revenues for political contributions, under some conditions the excise tax rate will be higher than the one chosen without lobbying.File | Dimensione | Formato | |
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