Strategic Corporate Social Responsibility, Foreign Ownership, and the Choice of Commodity Taxation Principle

This paper examines how strategic corporate social responsibility (CSR) and
foreign ownership influence the choice of commodity taxation principle. We
show that the destination and origin principles create different CSR incentives:
under the destination principle, increased foreign ownership raises CSR in
the domestic firm but lowers it in the foreign firm, with the opposite pattern
under the origin principle. Departing from Haufer et al. (2005), who support
the origin principle and negative taxes under a linear demand, we demonstrate
that incorporating foreign ownership and trade costs may justify a positive
commodity tax and favor the destination principle.