When Trade Leads to Inefficient Public Good Provision: a Tax competition model

Emmanuelle Taugourdeau and Abderrahmane Ziad

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper analyses the tax competition mechanisms in a context of commodity trade. We show that the trade market equilibrium may restore the efficiency of the public good provision when agents from different countries have symmetric preferences. Asymmetry in preferences implies over or underprovision in public goods depending on the degree of asymmetry between countries. In both cases, the price adjustment leaves the capital stock unchanged so that the stock of capital is not affected by the taxes. Finally, we show that the centralized choice does not systematically restore the efficiency of the public good provision

Keywords: Tax competition; Nash equilibrium; Interregional Trade (search for similar items in EconPapers)
JEL-codes: E62 F12 H21 H41 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-02
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
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ftp://mse.univ-paris1.fr/pub/mse/CES2015/15014.pdf (application/pdf)

Related works:
Working Paper: When Trade Leads to Inefficient Public Good Provision: a Tax competition model (2015)
Working Paper: When Trade Leads to Inefficient Public Good Provision: a Tax competition model (2015)
Working Paper: When Trade Leads to Inefficient Public Good Provision: A Tax Competition Model (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:15014

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