| Summary: | 碩士 === 逢甲大學 === 財稅學系 === 106 === The volume of international arms trade has gradually increased, as Asian countries have arouse an arms race. As a result, we began to think about how to limit the trade with the arms taxes, so that some country can reduce the tension. In this paper, the model proposed by Brander and Spencer (1985) who assumes that the market of arms is divided into three countries, one importer and two exporters, moreover, the products sold by the exporter are highly homogeneous. Through computing the welfare change in three countries, estimate whether the tax is possible to conduct and analyze the variety of welfare in three countries after levying the arms tax.
This study observed that the social welfare of the importing country changed as our expectation, with a trend of increasing first and then decreasing. This result correspond to the conclusion that Brander and Spencer (1984) suggested, the importing country can use the import tariff to obtain the export country’s earned in the country. In contrast, the changes in social welfare of the two exporters are only rising with the increase in the tax rate, and when the importer only taxes the largest exporter, the two exports has the maximum value of social welfare, but this will not happen if the second largest exporter country is only taxed.
Although the results of this study show that the feasibility of arms transaction tax levy is low, it is constrained by the arms trading hypothesis that there are only three countries in the market. The current weapons export leaders—the United States and Russia—have lower weapons manufacturing costs and are a major addition to the country’s social welfare. If the exporting countries aggregate global transactions, their social welfare values may be far beyond the results of the research. Therefore, the issues concerning the arms tax transaction tax are still to be studied in depth.
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