Regional taxation and retailing: the economic geography of the Internet

E.J. Levin, R.E. Wright

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


It is well established in the economics literature that before-tax prices are not independent of sales-tax rates. This paper shows that a sales-tax imposed in a high tax region can decrease the tax-included price for a buyer in a low tax region who purchases from a seller in the high tax region. Therefore, it may be more profitable for Internet retailers to be located in high tax regions. An empirical analysis shows that automobile manufacturers in the European Union (EU) set higher before-tax recommended prices for countries with low indirect taxes. This may contribute to the explanation of the flow of Internet automobile sales from high tax countries to low tax countries in the EU.
Original languageEnglish
Pages (from-to)337-356
Number of pages19
JournalInternational Review of Retail, Distribution and Consumer Research
Issue number3
Publication statusPublished - 3 Jul 2004


  • automobiles
  • EU
  • internet
  • pricing
  • tax rates
  • retail
  • taxation

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