Tax competition, capital mobility, and public good provision within a trading block
Ημερομηνία
2002Source
Review of International EconomicsVolume
10Pages
442-458Google Scholar check
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Metadata
Εμφάνιση πλήρους εγγραφήςΕπιτομή
The authors examine a two-country general-equilibrium model of a two-country trading block where governments through tax policies attract mobile capital and provide an imported public consumption good. Within this framework the authors examine, among other things, how preferences over the public good and the size (population) of a country affect the Nash or cooperative equilibrium values of income tax rates in the two countries. The analysis identifies sufficient conditions under which (i) the Nash/cooperative equilibrium income tax rates are strategic substitutes or complements, and (ii) the Nash equilibrium income tax rates may be greater than the cooperative rates.