EconPapers    
Economics at your fingertips  
 

Kant–Nash tax competition

Thomas Eichner () and Rüdiger Pethig ()
Additional contact information
Thomas Eichner: University of Hagen

International Tax and Public Finance, 2020, vol. 27, issue 5, No 3, 1108-1147

Abstract: Abstract In a two-country economy, we analyze how tax competition differs from the standard all-Nashian tax competition, if one or both countries are Kantians in Roemer’s sense. Kantians are shown to choose a higher tax rate than Nashians for any given tax rate of the other country, which indicates that they seek to mitigate the (Nashian) race to the bottom. In case of symmetric countries, the all-Kantian tax competition turns out to be efficient and the inefficient race to the bottom is weakened in economies with a Nashian and a Kantian. That confirms the intuitive idea that countries following the Kantian categorical imperative avoid or at least soften the socially undesirable impact of (Nashian) self-interest. We also investigate the incentives of opportunistic countries to choose Nashian or Kantian behavior out of self-interest and find that either both governments choose to behave as Kantians or that—under different conditions—the robust Nashian self-interest supersedes Kantian moral principles such that the inefficient all-Nashian tax competition results.

Keywords: Tax competition; Best reply; Kantian; Nashian; Endogenous; Behavior selection (search for similar items in EconPapers)
JEL-codes: H73 H87 C72 (search for similar items in EconPapers)
Date: 2020
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/s10797-020-09597-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Kant-Nash tax competition (2019) 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:27:y:2020:i:5:d:10.1007_s10797-020-09597-3

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

DOI: 10.1007/s10797-020-09597-3

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 () and Springer Nature Abstracting and Indexing ().

 
Page updated 2021-01-14
Handle: RePEc:kap:itaxpf:v:27:y:2020:i:5:d:10.1007_s10797-020-09597-3