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The purpose of this paper is twofold. We first investigate whether product market regulations affect commodity taxation in open-to-trade economies, and second, we study the strategic interaction in regulatory measures between trading partner countries. We present a two-country general equilibrium model in which destination-based commodity taxes finance public goods, and product market regulation affects both the number of firms in the market and product diversity. Based on data for 21 OECD countries over the 1990–2008 period, we provide empirical evidence suggesting that product market regulations are strategic complement policies and that domestic regulations have a negative impact on domestic commodity taxation.
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International Tax and Public Finance (2019) 26:919–965
https://doi.org/10.1007/s10797-018-9521-4
Commodity taxation and regulatory competition
Simone Moriconi1,2,3,4 ·Pierre M. Picard4,5 ·Skerdilajda Zanaj4
Published online: 2 November 2018
© Springer Science+Business Media, LLC, part of Springer Nature 2018
Abstract
The purpose of this paper is twofold. We first investigate whether product market reg-
ulations affect commodity taxation in open-to-trade economies, and second, we study
the strategic interaction in regulatory measures between trading partner countries. We
present a two-country general equilibrium model in which destination-based commod-
ity taxes finance public goods, and product market regulation affects both the number
of firms in the market and product diversity. Based on data for 21 OECD countries
over the 1990–2008 period, we provide empirical evidence suggesting that product
market regulations are strategic complement policies and that domestic regulations
have a negative impact on domestic commodity taxation.
Keywords Regulation ·Commodity tax ·Strategic interactions
JEL Classification F0 ·H1 ·H7 ·H87 ·L5
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10797-
018-9521-4) contains supplementary material, which is available to authorized users.
BSimone Moriconi
s.moriconi@ieseg.fr
Pierre M. Picard
pierre.picard@uni.lu
Skerdilajda Zanaj
skerdilajda.zanaj@uni.lu
1Department of Economics and Quantitative Methods, IÉSEG School of Management, Paris
campus,1 Parvis de La Défense, 92044 Paris Cedex, France
2Lille Economics and Management (LEM), Lille, France
3CESifo Munich, Munich, Germany
4CREA, University of Luxembourg, 162A, Avenue de la Faiencerie, 1511 Luxembourg,
Luxembourg
5CORE, Université Catholique de Louvain, Lofos Nymfon, Louvain-la-Neuve, Belgium
123
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