Tax Competition and International Public Goods

Kjetil Bjorvatn and Guttorm Schjelderup

International Tax and Public Finance, 2002, vol. 9, issue 2, 120 pages

Abstract: A well known result in the tax competition literature is that tax rates are set too low in the Nash equilibrium to finance an efficient level of public consumption goods. In this model we introduce international spillovers in public goods provision and show that such spillovers reduce, and in the limiting case of perfect spillovers, eliminate tax competition. There is, however, always underprovision of the public good in equilibrium, since larger spillovers increase the problem of free riding. In an extension to the model, we demonstrate that congestion costs may result in overprovision of the public good. Copyright Kluwer Academic Publishers 2002

Keywords: tax competition for capital; international public goods (search for similar items in EconPapers)
Date: 2002
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Working Paper: Tax Competition and International Public Goods (2000)
Working Paper: Tax Competition and International Public Goods (2000)
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DOI: 10.1023/A:1014600502655

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