Global Spillovers of Taxation in the Online Advertising Market. Theory and Evidence from Facebook.

Andrea Lassmann, Federica Liberini, Antonio Russo, Angel Cuevas, Ruben Cuevas

Research output: Working paper

Abstract

We analyse the effect and welfare implications of taxing multinational digital platforms on the global online advertising market. Using a novel dataset on advertising prices and product preferences of users from Facebook in OECD countries, jointly with international trade data, we show that an increase in the platform’s corporate tax rate in some countries had a strong effect on advertising prices therein. The increase spills over to other countries through pre-existing international trade linkages. This result is consistent with our theoretical model, which shows that a digital platform reduces the supply of ads to advertisers from countries where taxation increases.
Original languageEnglish
Publication statusPublished - May 2020

Publication series

NameCESIFO Working Paper
No.8149

Keywords

  • online advertising
  • multi-sided platforms
  • tax incidence
  • product interests
  • international trade

ASJC Scopus subject areas

  • Economics and Econometrics

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