In this paper we endogenize objective functions of the regions in case the of tax competition for foreign owned mobile capital. First, considering symmetric regions and simultaneous move tax competition, we demonstrate that the competing regions can restrict ‘race-to-the-bottom’ in tax rates...

This Paper tackles the issue of international fiscal coordination in a world where markets are integrated but national governments are sovereign. The consequences of capital market liberalization to national fiscal policies and possible remedies to resulting inefficiencies are analysed. A...

Many authors demonstrate that the tax gap resulting from tax competition increases with the size asymmetry of the competing countries. Consequently, increasing country-size disparities exacerbates the inefficiency of tax competition.The aim of this note is to show that this classical view has no...

Heterogeneous firm productivity raises the question of whether governments should pursue ‘pick-the-winner’ strategies by subsidizing highly productive firms more (or taxing them less) than their less productive counterparts. We study this issue in a setting where governments can set...

This paper reexamines the work of Kempf and Rota-Graziosi (J. Pub. Econ. 94: 768-776, 2010), which shows that leadership by the small region is the risk dominant equilibrium under the endogenous timing game. They obtained this result in a model where the asymmetry among regions translates into...

This paper analyzes the issue of leadership when two jurisdictions are engaged in tax competition and capital tax revenues are used to finance the provision of local public goods. For that purpose we consider a timing game between the two asymmetric jurisdictions. On the first stage...

A simple, partial equilibrium model of the supply of offshore tax havens is analyzed, when multinationals are capable of sheltering some of their worldwide income. This model provides a few contrasting predictions to those in “Tax Competition with Parasitic Tax Havens” by Slemrod and Wilson....

This paper studies the effects of political factors, mainly partisanship, on corporate taxes in the past 30years—a period of intensifying competitive pressure in Europe. The consideration of decision-makers who have ideological preferences yields in standard tax competition models the...

This paper provides a simple theoretical model of capital tax competition between countries that differ in spatial location, and where cross-border investment costs are proportional to distance (a gravity model). We model EU membership as a reduction in ‘distance’ between countries. Precise...

This article contributes to the literature on local tax interactions. Its novelty lies in its focus on the interactions of local governments across national borders. We use panel data for the French and German municipalities in the Rhine Valley for the period 2000–2007. The local governments...