EconPapers    
Economics at your fingertips  
 

Equilibrium leadership in tax competition models with capital ownership: a rejoinder

Jean Hindriks () and Yukihiro Nishimura ()
Additional contact information
Yukihiro Nishimura: Osaka University

International Tax and Public Finance, 2017, vol. 24, issue 2, 338-349

Abstract: Abstract This paper reconciles two opposite results in the tax competition literature. Kempf and Rota-Graziosi (J Public Econ 94(9–10):768–776, 2010) and Hindriks and Nishimura (J Public Econ 121:66–68, 2015) have shown that the two Stackelberg outcomes prevail as the subgame perfect equilibria when capital is entirely owned by nonresidents. However, Ogawa (Int Tax Public Finance 20(3):474–484, 2013) has shown that the simultaneous-move outcome prevails when capital is entirely owned by residents. We develop a model in which capital ownership can vary freely between these two polar cases. We show that there exists a unique degree of residential capital ownership such that the equilibrium switches from the Stackelberg to the simultaneous-move outcomes. The chance for the simultaneous-move outcome to prevail increases with the extent of production asymmetry between regions. Partial ownership also induces a novel effect of tax leadership that we call the preference reversion effect.

Keywords: Endogenous timing; Tax competition; Capital ownership (search for similar items in EconPapers)
JEL-codes: H30 H87 C72 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10797-016-9421-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Equilibrium Leadership in Tax Competition Models with Capital Ownership: A Rejoinder (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:24:y:2017:i:2:d:10.1007_s10797-016-9421-4

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2

Access Statistics for this article

International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf

More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2018-08-26
Handle: RePEc:kap:itaxpf:v:24:y:2017:i:2:d:10.1007_s10797-016-9421-4