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March 29, 2023

Brown Bag Seminar Industrial Economics

Competition and VAT Pass-Through


March 29, 2023
11:30 - 12:30
Francine D. Blau Room 3.3.002B+C


Themistoklis Kampouris, DIW Berlin

We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we study how changes in VAT rates are passed through to consumers in islands with different number of retailers. We show that pass-through increases with competition, going from 50% in monopoly to around 80% in more competitive markets but remains incomplete. In addition, we find that there is a positive correlation between competition and the speed of price adjustment. Finally, we find higher pass-through for products with more inelastic demand.


Themistoklis Kampouris, DIW Berlin