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Protective Excise Taxation

Author

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  • Michele Santoni

    (Università degli Studi di Milano)

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.

Suggested Citation

  • Michele Santoni, 2017. "Protective Excise Taxation," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 421-445, December.
    • Handle: RePEc:kap:jincot:v:17:y:2017:i:4:d:10.1007_s10842-017-0244-5
    DOI: 10.1007/s10842-017-0244-5
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    More about this item

    Keywords

    Excise taxation; Protectionism; Unionised international oligopoly; Lobbying;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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