Tax competition and information sharing in Europe: a signalling game

Andre Fourcans () and Thierry Warin

International Journal of Economics and Business Research, 2010, vol. 2, issue 1/2, 76-86

Abstract: This paper provides a challenging view to the tax harmonisation issue. The literature often proposes tax harmonisation to avoid free-riding behaviours in free-trade areas and more particularly in monetary unions. Without tax harmonisation, tax autonomy may lead to a "race to the bottom". The model proposed here shows that tax competition may lead to stability. If a country gives the signal that 'friendly' or coordinated taxation behaviour is not its priority, the result can be a 'race to the bottom'. Conversely, if both countries signal their ability to conduct such a war, this war will not occur, and the stability of the system will be ensured.

Keywords: EMU; Economic and Monetary Union; economic integration; tax competition; tax harmonisation; fiscal competition; taxation; European Union; EU; free-trade areas; information sharing; business research; Euro. (search for similar items in EconPapers)
Date: 2010
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Working Paper: Tax Competition and Information Sharing in Europe: A Signaling Game (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijecbr:v:2:y:2010:i:1/2:p:76-86

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