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Export Competition and the Remission of Domestic Environmental Taxes


We consider the use of border adjustments to compensate exporters for domestic environmental taxes imposed on an intermediate good. A model of successive oligopoly is used to consider the appropriate border adjustments. In this set-up, the relative importance of the forward incidence of the environmental tax and the backward incidence of the remission play a key role. The results highlight that the simple rule employed by GATT/WTO to set the export remittance equal to the level of the environmental tax is likely to be inappropriate.

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Correspondence to Steve Mccorriston.

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JEL Code: H87, Q38

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Mccorriston, S., Sheldon, I. Export Competition and the Remission of Domestic Environmental Taxes. Int Tax Public Finan 12, 627–637 (2005).

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  • environmental taxes
  • border adjustments
  • imperfect competition