The role of international public goods in tax cooperation

Pantelis Kammas () and Apostolis Philippopoulos

MPRA Paper from University Library of Munich, Germany

Abstract: We provide a quantitative assessment of the welfare cost of tax competition or, equivalently, the welfare benefit of international tax policy cooperation. We use a simple multi-country general equilibrium model of a world economy, in which there are two types of cross-country spillovers: the first one is generated by international capital mobility and the second by the presence of an international public good. In the absence of international public goods, although welfare in the non-cooperative case is typically lower than in the cooperative case, the welfare difference is negligible quantitatively. Things change drastically, both quantitatively and qualitatively, once we introduce international public goods. Now, there can be big benefits from cooperation and welfare effects cease to be monotonic.

Keywords: Capital mobility; Tax competition; Public goods; Welfare (search for similar items in EconPapers)
JEL-codes: H4 H2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2009-05-15
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:15844

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