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Coordinating tariff reduction and domestic tax reform under imperfect competition

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  • Keen, M.
  • Ligthart, J.E.

    (Tilburg University, School of Economics and Management)

Abstract

A major constraint on trade liberalization in many countries is the prospective loss of government revenue. Recent results, however, have established a simple and appealing strategy for overcoming this difficulty, whilst still realizing the efficiency gains from liberalization, in small, competitive economies: combining tariff cuts with point‐for‐point increases in destination‐based consumption taxes unambiguously increases both national welfare and total government revenue. This note explores the implications of imperfect competition for this strategy. Examples are easily found in which this strategy unambiguously reduces domestic welfare.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Keen, M. & Ligthart, J.E., 2005. "Coordinating tariff reduction and domestic tax reform under imperfect competition," Other publications TiSEM db2f2573-0206-4b08-b9ae-c, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:db2f2573-0206-4b08-b9ae-cf53657e145f
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    References listed on IDEAS

    as
    1. Keen, Michael & Ligthart, Jenny E., 2002. "Coordinating tariff reduction and domestic tax reform," Journal of International Economics, Elsevier, vol. 56(2), pages 489-507, March.
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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