Imperfect competition, indirect tax harmonization and public goods

Christos Kotsogiannis, Miguel Angel Lopez-Garcia

Research output: Contribution to journalArticleResearchpeer-review

5 Citations (Scopus)


This paper shows that the welfare implications of indirect tax harmonization in a two-country imperfectly competitive framework, are, in general, indeterminate in the presence of public goods: Both countries can be made either worse off or better off. This holds under both the destination and origin principles of taxation and is in sharp contrast to existing results where revenue effects are not present. A consequence of this indeterminacy is that a precise evaluation of tax-harmonizing policies under both tax regimes requires an explicit consideration of the underlying preferences for private and public goods as well as the oligopolistic sectors' relative cost structures. © 2006 Springer Science + Business Media, LLC.
Original languageEnglish
Pages (from-to)135-149
JournalInternational Tax and Public Finance
Publication statusPublished - 1 Apr 2007


  • Destination principle
  • Indirect tax harmonization
  • Origin principle
  • Public goods
  • Reform of commodity taxes


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