Tax competition and determination of the quality of public goods

A. H. Ould Abdessalam and Eric Kamwa

No 2013-31, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: In this paper, the authors analyze the behavior of local governments on capital taxation when the financial choices in terms of a public good quality are done by a central planner. More specifically, they ask the question whether a local government has an interest to tax the mobile factor in addition to the tax on representative households or not. The authors show, through a comparison of social welfare given the strategies chosen by the locals governments, that whatever the quality of the public good and its cost is, a local government always has an interest to tax the mobile factor. This leads to a Nash-equilibrium in dominant strategy in their model.

Keywords: tax competition; public goods; taxation; quality; welfare (search for similar items in EconPapers)
JEL-codes: D00 H20 H41 H70 H71 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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http://www.economics-ejournal.org/economics/discussionpapers/2013-31
https://www.econstor.eu/bitstream/10419/74473/1/746884931.pdf (application/pdf)

Related works:
Journal Article: Tax competition and the determination of the quality of public goods (2014)
Working Paper: Tax Competition and the Determination of the Quality of Public Goods (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201331

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