The impact of internet sales tax in a search model of money: Some analytical results
© 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.
Dai, T; Jiang, S; Liu, X; Wang, W
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