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Tax Competition and Economic Geography

Fredrik Andersson () and Rikard Forslid ()

Journal of Public Economic Theory, 2003, vol. 5, issue 2, 279-303

Abstract: Tax competition between two countries is considered in a trade-and-location setting with differentiated products and monopolistic competition. There are two groups of workers, mobile ones and immobile ones. Taxes are used for producing a public good. It is shown that an equilibrium with mobile workers dispersed across countries is destabilized by increased taxes on these mobile workers-even for perfectly coordinated tax increases. It is also shown that while tax competition gives rise to standard distortions in a tax-competition game when mobile workers are dispersed, different distortions result when they are concentrated in one country. Copyright 2003 Blackwell Publishing Inc..

Date: 2003
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Working Paper: Tax Competition and Economic Geography (2000) Downloads
Working Paper: Tax Competition and Economic Geography (1999) Downloads
Working Paper: Tax Competition and Economic Geography (1999) Downloads
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