Regional taxation and retailing: the economic geography of the internet

Levin, E.J., and Wright, R.E. (2004) Regional taxation and retailing: the economic geography of the internet. International Review of Retail, Distribution and Consumer Research, 14, pp. 337-356. (doi: 10.1080/09593960420001678390)

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Abstract

It is well established in the economics literature that before-tax prices are not independent of sales-tax rates. This paper shows that a sales-tax imposed in a high tax region can decrease the tax-included price for a buyer in a low tax region who purchases from a seller in the high tax region. Therefore, it may be more profitable for Internet retailers to be located in high tax regions. An empirical analysis shows that automobile manufacturers in the European Union (EU) set higher before-tax recommended prices for countries with low indirect taxes. This may contribute to the explanation of the flow of Internet automobile sales from high tax countries to low tax countries in the EU.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Wright, Dr Robert and Levin, Dr Eric
Authors: Levin, E.J.,, and Wright, R.E.
College/School:College of Social Sciences > School of Social and Political Sciences > Urban Studies
Journal Name:International Review of Retail, Distribution and Consumer Research
ISSN:0959-3969
Published Online:17 February 2007

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