Leadership in Tax Ccompetition with Fiscal Equalization Transfers

Junichi Haraguchi and Hikaru Ogawa

No CIRJE-F-1031, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We propose a timing game of asymmetric tax competition with fiscal equalization scheme. The study finds that governments tend to play a sequential-move game as the scale of equalization transfer increases, which explains the emergence of tax leaders in tax competition. The presence of a tax leader is likely to exacerbate capital misallocation among countries, suggesting that equalization transfers aimed at narrowing the interregional fiscal gap might cause a problem of efficient capital allocation.

Pages: 13 pages
Date: 2016-11
New Economics Papers: this item is included in nep-pbe and nep-ure
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Related works:
Journal Article: Leadership in Tax Competition with Fiscal Equalization Transfers (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2016cf1031

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