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Tax Competition Reconsidered

Myrna Wooders, Benjamin Zissimos and Amrita Dhillon ()

No 269396, Economic Research Papers from University of Warwick - Department of Economics

Abstract: In a classic model of tax competition, we show that the level of public good provision and taxation in a Nash equilibrium can be efficient or inefficient with either too much, or too little public good provision. The key is whether there exists a unilateral incentive to deviate from the efficient state and, if so, whether this entails raising or lowering taxes. A priori, there is no reason to suppose the incentive is in either one direction or the other. In addition, we demonstrate conditions ensuring existence of an asymmetric Nash equilibrium with efficient public good provision. As in prior literature, local amenities enhance capital’s productivity. Prior literature, however, focuses on under-provision of public goods.

Keywords: Agricultural and Food Policy; Financial Economics (search for similar items in EconPapers)
Pages: 57
Date: 2001-12-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Journal Article: Tax Competition Reconsidered (2007) Downloads
Working Paper: Tax Competition Reconsidered (2006) Downloads
Working Paper: Tax Competition Reconsidered (2001) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269396

DOI: 10.22004/ag.econ.269396

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