Electoral Commitment in Asymmetric Tax-competition Models

Yukihiro Nishimura () and Kimiko Terai ()
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Yukihiro Nishimura: Corresponding author. Graduate School of Economics, Osaka University
Kimiko Terai: Faculty of Economics, Keio University

No 20-21, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This study examines the political process of tax competition among asymmetric countries, highlighting the role of the commitment to the electoral promises. The median voters deliberately elect a delegate whose preferences di?er from their own (strategic delegation), which is self-enforcing under symmetric countries. We ?rst show that the outcome of strategic delegation is replicated when the candidates do not make binding campaign promises in both countries, and the opposite scenario of the binding commitments to the platforms leads to the self-representation by the median voters. We then amplify the model by adding the pre-election stage where the citizens choose whether the credibility of election promises is critical, through subscription numbers of newspapers and social media which determine the cost of betrayal of the proposed platforms (or the lack of the proposal). We then show that, depending on the type of asymmetries under consideration, su?cient asymmetry or su?ciently equal income distribution generate the commitment to the election campaign promises as the equilibrium outcome.

Keywords: Capital-tax competition; Election campaign promises; Asymmetric countries; Voting (search for similar items in EconPapers)
JEL-codes: C72 D72 D78 H23 H87 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2021-02
New Economics Papers: this item is included in nep-cdm and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:2021

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