Tax Competition and International Public Goods

Kjetil Bjorvatn and Guttorm Schjelderup

No 390, CESifo Working Paper Series from CESifo

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.

Keywords: Tax competition for capital; international public goods (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Tax Competition and International Public Goods (2002)
Working Paper: Tax Competition and International Public Goods (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_390

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