Tax Competition, Investment Irreversibility and the Provision of Public Goods

Michele Moretto, Paolo Panteghini and Sergio Vergalli

No 2013.66, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This article studies the effects of tax competition on the provision of public goods under business risk and partial irreversibility of investment. As will be shown, the provision of public goods changes over time and also depends on the business cycle. In particular, under source-based taxation, public goods can be optimally provided during a downturn, in the short term. The converse is true during a recovery, when they are underprovided. In the long term however, tax competition does not affect capital accumulation and therefore, the provision of public goods.

Keywords: Irreversibility; Risk; Short- and Long-Term Effects; Tax Competition (search for similar items in EconPapers)
JEL-codes: H25 H32 (search for similar items in EconPapers)
Date: 2013-07
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Related works:
Journal Article: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2015)
Journal Article: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2015)
Working Paper: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2013)
Working Paper: Tax Competition, Investment Irreversibility and the Provision of Public Goods (2013)
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