Capital tax competition among an arbitrary number of asymmetric countries

Susana PERALTA and Tanguy van Ypersele ()

No 2002031, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper addresses the issue of capital tax competition among an arbitrary number of countries. Countries are allowed to be asymmetric not only in their population endowment but also in their capital endowment per inhabitant. National governmentstax capital and labor in order to finance a public good. Asymmetric capital taxation arises at equilibrium leading to a distortion on the international capital market. We provide conditions for the existence of a Nash Equilibrium. We fully characterize how equilibrium taxes and welfare levels depend upon countries population and capital endowments.

Keywords: capital mobility; tax competition; asymmetric regions; Nash equilibrium (search for similar items in EconPapers)
JEL-codes: H23 H3 H73 F21 (search for similar items in EconPapers)
Date: 2002-05-01
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Persistent link: http://EconPapers.repec.org/RePEc:cor:louvco:2002031

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