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Optimal Corporation Tax: An I.O. Approach

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  • Luca Colombo
  • Paola Labrecciosa
  • Patrick Paul Walsh
Abstract
Theory predicts that optimal effective corporation tax rates will be negatively related to industry specific sunk costs, and hence industry concentration. Governments should tax industries with monopolistic power softly. Evidence suggests that this Schumpeterian (1942) principle of corporate taxation was used widely across industries in France, Italy and the UK in the 1990s.
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Suggested Citation

  • Luca Colombo & Paola Labrecciosa & Patrick Paul Walsh, 2005. "Optimal Corporation Tax: An I.O. Approach," The Institute for International Integration Studies Discussion Paper Series iiisdp97, IIIS.
    • Handle: RePEc:iis:dispap:iiisdp97
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    Keywords

    Note:;

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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