Non-cooperative vs. Minimum- Rate Commodity Taxation

The desirability of commodity taxation under non-linear income taxation and heterogeneous tastes

This paper revisits the Atkinson–Stiglitz result on uselessness of commodity taxation in the presence of optimal non-linear income taxation in a more general setup, namely when tastes are heterogeneous. This general analysis displays the key economic assumptions under which the Atkinson–Stiglitz result is robust. A small tax on a given commodity is desirable if high income earners have a relati...

International Commodity Taxation under Monopolistic Competition International Commodity Taxation under Monopolistic Competition *

We analyze non-cooperative commodity taxation in a symmetric twocountry trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exact...

A New Approach to Optimal Commodity Taxation

This paper makes a fresh attempt at characterizing optimal commodity taxes. Under the usual assumptions, an extremely simple expression of second-best commodity taxes is derived, showing tax rates as functions of observable variables only, rather than as functions of unobservable variables such as compensated cross elasticities. The main formula is independent of special preferences, and indepe...

Optimal commodity taxation for reduction of envy

Tying governments' hands in commodity taxation

In the 1970s, taxation of "windfall" profits from primary products and intervention in trade and production tempted governments into expansionary fiscal policies, whilst stifling the private sector and depressing growth. However, the experience of the recent coffee boom has so far been more favourable: those African countries which liberalized and left a large share of the “windfall” with the p...