Comparison Between Uniform Tariff and Progressive Consumption Tax in the Chinese Automobile Industry*

Shen, C; Wang, Y; Xiao, J; Zhou, X

Comparison Between Uniform Tariff and Progressive Consumption Tax in the Chinese Automobile Industry*

Shen, C Wang, Y Xiao, J

Zhou, X

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Publisher:: Wiley
Publication Type:: Journal Article
Citation:: Journal of Industrial Economics, 2021, 69, (1), pp. 169-213
Issue Date:: 2021-03-01

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Field	Value	Language
dc.contributor.author	Shen, C
dc.contributor.author	Wang, Y
dc.contributor.author	Xiao, J https://orcid.org/0000-0003-3979-9828
dc.contributor.author	Zhou, X
dc.date.accessioned	2022-08-06T06:05:44Z
dc.date.available	2022-08-06T06:05:44Z
dc.date.issued	2021-03-01
dc.identifier.citation	Journal of Industrial Economics, 2021, 69, (1), pp. 169-213
dc.identifier.issn	0022-1821
dc.identifier.issn	1467-6451
dc.identifier.uri	http://hdl.handle.net/10453/159702
dc.description.abstract	This paper studies the protectionist effect of a non-trade policy — a consumption tax — compared to that of a tariff on the Chinese automobile market. Our empirical findings suggest that both the consumption tax and the tariff can protect domestic automakers’ market shares, but they can only shift a small portion of demand from imported cars to domestic cars. This demand exclusion is caused by the weak substitution between imported cars and domestic cars, and it is the underlying reason for the welfare loss caused by both the tariff and the consumption tax. A change in the consumption tax favorable to domestic manufacturers is equivalent to an additional 28% tariff, beyond the explicit 25% tariff, in terms of its protective effect on domestic manufacturers’ market shares.
dc.language	en
dc.publisher	Wiley
dc.relation.ispartof	Journal of Industrial Economics
dc.relation.isbasedon	10.1111/joie.12255
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1401 Economic Theory, 1402 Applied Economics, 1403 Econometrics
dc.subject.classification	Economics
dc.title	Comparison Between Uniform Tariff and Progressive Consumption Tax in the Chinese Automobile Industry*
dc.type	Journal Article
utslib.citation.volume	69
utslib.for	1401 Economic Theory
utslib.for	1402 Applied Economics
utslib.for	1403 Econometrics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-08-06T06:05:43Z
pubs.issue	1
pubs.publication-status	Published
pubs.volume	69
utslib.citation.issue	1

Abstract:

This paper studies the protectionist effect of a non-trade policy — a consumption tax — compared to that of a tariff on the Chinese automobile market. Our empirical findings suggest that both the consumption tax and the tariff can protect domestic automakers’ market shares, but they can only shift a small portion of demand from imported cars to domestic cars. This demand exclusion is caused by the weak substitution between imported cars and domestic cars, and it is the underlying reason for the welfare loss caused by both the tariff and the consumption tax. A change in the consumption tax favorable to domestic manufacturers is equivalent to an additional 28% tariff, beyond the explicit 25% tariff, in terms of its protective effect on domestic manufacturers’ market shares.

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http://hdl.handle.net/10453/159702