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Political competition and leadership in tax competition

Rupayan Pal () and Ajay Sharma

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: In this paper, we introduce political competition in a sequential move tax competition game between two regions for foreign owned mobile capital. It shows that in case of sequential move, political delegation takes place only in the follower region, not in the leader region. Moreover, political competition need not necessarily lead to higher tax rate in equilibrium. These results are in the sharp contrast to the existing results.

Keywords: Mobile capital; Tax competition; Political competition; Leadership; Public good (search for similar items in EconPapers)
JEL-codes: D40 D70 F21 H25 H42 R50 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-10
New Economics Papers: this item is included in nep-acc, nep-cis, nep-pbe, nep-pol, nep-pub and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2011-024

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