Leadership in Tax Competition with Fiscal Equalization Transfers

Haraguchi Junichi () and Hikaru Ogawa
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Haraguchi Junichi: Faculty of Economics, Kanagawa University, 3-27-1, Rokkakubashi, Kanagawa-ku Yokohama, Kanagawa, 221-8686, Japan

The B.E. Journal of Economic Analysis & Policy, 2018, vol. 18, issue 3, 15

Abstract: We propose a timing game of asymmetric tax competition with fiscal equalization scheme. The study finds that governments tend to play a sequential-move game as the scale of equalization transfer increases, which explains the emergence of tax leaders in tax competition. The presence of a tax leader is likely to exacerbate capital misallocation among countries, suggesting that equalization transfers aimed at narrowing the interregional fiscal gap might cause an inefficient capital allocation.

Keywords: endogenous timing; equalizationtransfers; leadership; tax competition (search for similar items in EconPapers)
JEL-codes: H30 H87 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Leadership in Tax Ccompetition with Fiscal Equalization Transfers (2016)
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DOI: 10.1515/bejeap-2017-0217

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