Are regional asymmetries detrimental to tax coordination in a repeated game setting?

Jun-ichi Itaya (), Makoto Okamura and Chikara Yamaguchi

Journal of Public Economics, 2008, vol. 92, issue 12, 2403-2411

Abstract: This paper reexamines the main findings of Cardarelli et al. [Cardarelli, R., Taugourdeau, E., Vidal, J.-P., 2002. A repeated interactions model of tax competition, Journal of Public Economic Theory 4, 19-38], and Catenaro and Vidal [Catenaro, M., Vidal, J.-P., 2006. Implicit tax co-ordination under repeated policy interactions, Recherches Economiques de Louvain 72, 1-17], who show that regional asymmetries undermine the implicit collusion of tax coordination in a repeated game model of capital tax competition. In particular, this paper investigates how increased regional differences in per capita capital endowments and/or production technologies affect the willingness of each region to cooperate in achieving tax coordination. It is shown that there may exist cases where as regional asymmetries in net capital exporting positions increase, regions are more likely to cooperate on capital taxes and thereby achieve tax coordination.

Keywords: Tax; competition; Asymmetric; regions; Cooperation; Repeated; game; Tax; coordination (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (59)

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Working Paper: Are Regional Asymmetries Detrimental to Tax Coordination in a Repeated Game Setting? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:92:y:2008:i:12:p:2403-2411

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