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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 (3). pp. 337-356. ISSN 0959-3969

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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: Article
ID code: 6925
Keywords: automobiles, EU, internet, pricing, tax rates, retail, taxation, Finance, Electronic computers. Computer science, Economic Theory, Business and International Management, Economics and Econometrics, Marketing
Subjects: Social Sciences > Finance
Science > Mathematics > Electronic computers. Computer science
Social Sciences > Economic Theory
Department: Strathclyde Business School > Economics
Related URLs:
    Depositing user: Strathprints Administrator
    Date Deposited: 01 Oct 2008
    Last modified: 04 Sep 2014 16:13
    URI: http://strathprints.strath.ac.uk/id/eprint/6925

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