Bigger Countries with Probably Lower Commodity Taxes

Xin Liu and Paul Madden

Studies in Microeconomics, 2013, vol. 1, issue 2, 173-183

Abstract: The article studies a spatial model of commodity tax competition between two countries that may differ in both population density and land mass, synthesizing two earlier contributions where pure strategy equilibria always existed and where the ‘bigger’ country (that with the larger population) set the higher tax. In our more general setting, pure strategy equilibria may not exist, but we can compute a mixed strategy equilibrium, which offers probabilistic alternatives to the empirically questionable ‘big country-high tax’ correlation; the bigger country may have a lower ‘expected’ tax rate and may be ‘more likely’ to be the low tax country.

Keywords: Commodity taxes; country size; mixed strategies (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/2321022213501257 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:1:y:2013:i:2:p:173-183

DOI: 10.1177/2321022213501257

Access Statistics for this article

More articles in Studies in Microeconomics
Bibliographic data for series maintained by SAGE Publications ().