To read the full version of this content please select one of the options below:

Looking at the taxation effect on cross-state smuggling using rational addiction models

Tina Ting Swan (Department of Economics and Finance, Buffalo State College, Buffalo, New York, USA)
Bruce Qiang Sun (Buffalo State College, Buffalo, New York, USA)
Frederick Floss (Department of Economics and Finance, Buffalo State College, Buffalo, New York, USA)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 2 August 2019

Abstract

Purpose

The purpose of this paper is to show how the taxation effect on cross-state smuggling can be a valid instrumental variable for lagged and future consumption together with the local price series.

Design/methodology/approach

On the same grounds, the authors raise the question using the rational-addiction model by noticing that the neighboring price differentials really capture the possible smuggling or bootlegging effects.

Findings

Moreover, the authors look into the extended model to test the key condition that the expected future financial consequences will affect the current consumptions.

Originality/value

This supports the rational-addiction model, which can be used to plan the taxation for the forward-looking consumptions.

Keywords

Citation

Swan, T.T., Sun, B.Q. and Floss, F. (2019), "Looking at the taxation effect on cross-state smuggling using rational addiction models", Journal of Economic Studies, Vol. 46 No. 3, pp. 652-670. https://doi.org/10.1108/JES-10-2017-0294

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited