Detalle Publicación

ARTÍCULO
Passing-through taxes beyond borders with a cobra effect
Título de la revista: JOURNAL OF PUBLIC ECONOMICS
ISSN: 0047-2727
Volumen: 177
Páginas: 104040
Fecha de publicación: 2019
Lugar: WOS
Resumen:
Does the tax pass-through effect go beyond borders? We use firm-level prices to analyze the incidence of a tax change on firms on different sides of a border in an industry with differentiated firms selling a homogeneous product. By using a difference-in-differences strategy, we find that firms' tax responses are consistent with predicted firms' best-responses. We show that the effect of the tax change was even greater after a politician publicly asked his fellow citizens to avoid crossing the border to buy. Besides suggesting that politicians should be more prudent, these findings highlight the importance of fiscal harmonization in areas without economic borders.