Even small trade costs restore efficiency in tax competition

We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax competition. It turns out that even small levels of transport cost lead to a complete breakdown of the seminal result, the underprovision of public goods. Instead, there is a symmetric equilibrium with efficient public goods provision in all jurisdictions.

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Year of publication:	2010
Authors:	Becker, Johannes ; Runkel, Marco
Publisher:	Munich : Center for Economic Studies and ifo Institute (CESifo)
Subject:	Kapitalertragsteuer \| Steuerwettbewerb \| Öffentliches Gut \| Versorgung \| Gleichgewichtstheorie \| Transportkosten \| Theorie \| tax competition \| public goods provision \| trade

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Series:	CESifo Working Paper ; 3221
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	639569161 [GVK] hdl:10419/46322 [Handle]
Classification:	H25 - Business Taxes and Subsidies ; F23 - Multinational Firms; International Business
Source:	EconStor

Persistent link: https://www.econbiz.de/10010274798