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Endogenous Choice on Tax Instruments in a Tax Competition Model: Unit Tax versus Ad Valorem Tax

Nobuo Akai (), Hikaru Ogawa and Yoshitomo Ogawa

No 10-01, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper analyzes an endogenous choice problem with regard to tax instruments in a capital tax competition model. Considering a symmetric and two-region model of tax competition, where each region is allowed to choose either unit or ad valorem tax, we show that selecting unit tax as a policy instrument is the dominant strategy of governments. An interpretation of this result is clearly explained by the properties of the best response curves.

Keywords: Tax competition; Unit tax; Ad valorem tax (search for similar items in EconPapers)
JEL-codes: H20 H21 H77 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2010-01
New Economics Papers: this item is included in nep-acc, nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (4)

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Journal Article: Endogenous choice on tax instruments in a tax competition model: unit tax versus ad valorem tax (2011) Downloads
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