Tax Competition, Imperfect Capital Mobility and the gain from non-preferential agreements

Kaushal Kishore ()
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Kaushal Kishore: Southern Methodist University

No 804, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: The gain to competing governments from entering into binding non-preferential tax agree- ments (that prevents discriminatory taxation in favor of mobile capital) depends on the extent of capital mobility between jurisdictions. In particular the gain is increasing in the cost of re- location of capital and the fraction of the domestic tax base which is relatively immobile. We show this in a symmetric model of capital tax competition between two governments where all capital is imperfectly mobile and di¤er only in their cost of relocation.

Keywords: Tax Competition; Capital Mobility; Non-Preferential Regime. (search for similar items in EconPapers)
JEL-codes: F15 F21 H26 H87 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-ure
Date: Written 2008-07
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