On the Sustainability of Partial Tax Harmonization among Asymmetric Countries

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

No 259, Discussion paper series. A from Graduate School of Economics and Business Administration, Hokkaido University

Abstract: This paper investigates the conditions under which partial harmonization for capital taxation is sustained in a repeated interactions model of tax competition when there are three countries asymmetric in repect to their capital endowments. We show that regardless of the structure of the coalition (i.e., any group of asymmetric countries), whether partial tax harmonization is sustainable or not crucially depends on the capital endowment of the median country relative to those of the large and small countries. The most noteworthy finding is that the closer the capital endowment of the median country to the average capital endowment of the large and small countries, the less likely is the tax harmonization including the median country to prevail and the more likely is the partial tax harmonization excluding the median country to prevail.

Keywords: Tax coordination; Asymmetric countries; Repeated game; Tax competition (search for similar items in EconPapers)
Pages: 36 pages
Date: 2013-05-30
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: On the Sustainability of Partial Tax Harmonization among Asymmetric Countries (2011)
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