The impact of internet sales tax in a search model of money: Some analytical results

Tiantian Dai; Shenyi Jiang; Xiangbo Liu; Wen Wang

The impact of internet sales tax in a search model of money: Some analytical results

Tiantian Dai, Shenyi Jiang, Xiangbo Liu^*, Wen Wang

^*Corresponding author for this work

Research output: Contribution to journal › Journal Article › peer-review

Abstract

We use a search-theoretic model to study the impact of internet sales taxes, in both lump-sum and proportional fashions. We show that both forms of taxes, especially the lump-sum tax, have real effects on the online market if the terms of trade are negotiable, while a proportional tax distorts the economy further. We then propose a preferential tax policy and show that it together with a lump-sum internet sales tax can recover the first best. We also give some policy suggestions.

Original language	English
Pages (from-to)	133-144
Number of pages	12
Journal	Annals of Economics and Finance
Volume	17
Issue number	1
Publication status	Published - May 2016
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2016, Central University of Finance and Economics. All rights reserved.

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Keywords

Internet sales tax
Policy implications

Cite this

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AB - We use a search-theoretic model to study the impact of internet sales taxes, in both lump-sum and proportional fashions. We show that both forms of taxes, especially the lump-sum tax, have real effects on the online market if the terms of trade are negotiable, while a proportional tax distorts the economy further. We then propose a preferential tax policy and show that it together with a lump-sum internet sales tax can recover the first best. We also give some policy suggestions.

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KW - Policy implications

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The impact of internet sales tax in a search model of money: Some analytical results

Abstract

Bibliographical note

UN SDGs

Keywords

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Cite this