Tax Competition, Investment Irreversibility and the Provision of Public Goods

Michele Moretto, Sergio Vergalli and Paolo Panteghini

German Economic Review, 2015, vol. 16, issue 4, 408-421

Abstract: This article studies the effects of tax competition on the provision of public goods under business risk and partial irreversibility of investment. As will be shown, the provision of public goods changes over time and also depends on the business cycle. In particular, under source-based taxation, in the short term, public goods can be optimally provided during a downturn. The converse is true during a recovery: in this case, they are underprovided. In the long term, however, tax competition does not affect capital accumulation. This means that the provision of public goods is unaffected by taxation.

Keywords: Irreversibility; risk; short- and long-term effects; tax competition (search for similar items in EconPapers)
Date: 2015
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Journal Article: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2015)
Working Paper: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2013)
Working Paper: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2013)
Working Paper: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2013)
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DOI: 10.1111/geer.12058

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