Leviathanian Fiscal Competition in Heterogeneous Country

Sergey Kokovin and Evgeny Zhelobodko

EERC Working Paper Series from EERC Research Network, Russia and CIS

Abstract: In this normative study of fiscal competition mechanism, we allow for various schemes of taxation, various mobility of tax-base, non-identical regions, and nonbenevolent governments. We examine the fundamental trade-o® between “negative externalities” of the competition and benefits from its budget discipline. Some indicators of regional “rivalry” and “non-benevolence” are constructed for diagnosing marginal “over-taxing” in any region. It enables also “in-large” comparison of fiscal regimes. Under some restrictions on the country’s heterogeneity in tax rates, marginal “over-taxing” at competition signifies that switching to certain sort of tax co-ordination would deteriorate welfare.

JEL-codes: D43 H32 H73 (search for similar items in EconPapers)
Date: 2004-07-19
New Economics Papers: this item is included in nep-pbe and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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