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On the Efficiency of Destination and Origin Commodity Taxation in the Presence of Consumption Generated Cross-Border Pollution

Author

Listed:
  • Fabio Antoniou
  • Panos Hatzipanayotou
  • Michael S. Michael
  • Nikos Tsakiris

Abstract

We combine consumption generated cross-border pollution and public pollution abatement in a theoretical framework to examine the efficiency of the destination and origin principles of commodity taxation. The key result of our study is that with public pollution abatement, the non-cooperative equilibrium origin-based consumption taxes are set efficiently. This result holds not only in the context of symmetric countries, but under certain conditions carry over also to asymmetric countries. The non-cooperative equilibrium destination-based consumption taxes are inefficient. In the absence of public pollution abatement, the Nash equilibrium commodity taxes under either taxation principle are inefficient.

Suggested Citation

  • Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2016. "On the Efficiency of Destination and Origin Commodity Taxation in the Presence of Consumption Generated Cross-Border Pollution," CESifo Working Paper Series 6221, CESifo.
    • Handle: RePEc:ces:ceswps:_6221
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    References listed on IDEAS

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    Cited by:

    1. Hiroshi Aiura & Hikaru Ogawa, 2021. "Does E-Commerce Ease or Intensify Tax Competition? Destination Principle vs. Origin Principle," CIRJE F-Series CIRJE-F-1169, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    Keywords

    commodity taxation; destination principle; origin principle; cross-border pollution;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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