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


Journal Article

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

Duke Authors

Cited Authors

  • Dai, T; Jiang, S; Liu, X; Wang, W

Published Date

  • May 1, 2016

Published In

Volume / Issue

  • 17 / 1

Start / End Page

  • 133 - 144

International Standard Serial Number (ISSN)

  • 1529-7373

Citation Source

  • Scopus