Are Regional Asymmetries Detrimental to Tax Coordination in a Repeated Game Setting?

Jun-ichi Itaya (), Makoto Okamura and Chikara Yamaguchi

No 183, Discussion paper series. A from Graduate School of Economics and Business Administration, Hokkaido University

Abstract: This paper reexamines the main findings of Cardarelli et al. (2002), and Contenaro and Vidal (2006), who show that regional asymmetries undermine the implicit collusion of tax coordination in a repeated game model of capital tax competition. In particular, this paper investigates how increasing regional differences in the per capita capital endowments and/or production technologies affect the willingness of each region to cooperate in achieving tax coordination. It is shown not only that there may exist cases where tax coordination is facilitated with an increase in regional asymmetries increase and the greater the degree of asymmetry in terms of the net capital exports of the regions, but also that the higher the cooperation of the regions with respect to the sustenance of tax coordination.

Keywords: Tax competition; Asymmetric regions; Cooperation; Repeated game; Tax coordination (search for similar items in EconPapers)
Pages: 14 pages
Date: 2007-06-18
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Journal Article: Are regional asymmetries detrimental to tax coordination in a repeated game setting? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hok:dpaper:183

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