The Spillover Effects of Good Governance in a Tax Competition Framework with a Negative Environmental Externality

Raymond Batina ()
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Raymond Batina: School of Economic Sciences, Washington State University

No 2014-6, Working Papers from School of Economic Sciences, Washington State University

Abstract: We investigate the impact of a political regime shift affecting consumers, business interests and lobby contributions when countries engage in tax competition in capital and a polluting resource. When consumers have more in fluence than resource owners, the resource tax rate and public spending rise while environmental damages, lobbying contribution, and the capital tax rate fall. This response can spillover to other countries leading to lower welfare. Capital tax harmonization improves welfare of consumers and resource owners. Resource tax harmonization and governance harmonization reducing the influence of lobbying both improve consumer welfare but resource owners are worse off.

Keywords: lobbying; environmental damage; tax competition; spillovers (search for similar items in EconPapers)
JEL-codes: D73 H23 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-10
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Citations: View citations in EconPapers (1)

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