This paper studies fiscal competition among jurisdictions in a dynamic framework, where the degree of mobility of private capital across jurisdictions boundaries is perfect. The optimal tax on mobile capital is a source tax that taxes away factor rents. Further we show that taxation of mobile...

This paper examines how a fiscal equalization system affects the disciplining effect of competition for capital among heterogeneous regions in a decentralized economy. I build a model in which regions that are heterogeneous in initial endowments try to attract capital by competing public input...

This paper analyzes the relation between tax auditing and fiscal equalization in the context of fiscal competition. We incorporate a model of tax evasion by firms into a standard tax competition framework where regional governments use their audit rates as a strategic instrument to engage in...

Drawing on a wide range of literature and ideas, a new “second-generation theory of fiscal federalism” is emerging that provides new insights into the structure and working of federal systems. After a restatement and review of the first-generation theory, this paper surveys this new body of...

This paper shows that the welfare implications of indirect tax harmonization in a two-country imperfectly competitive framework, are, in general, indeterminate in the presence of public goods: Both countries can be made either worse off or better off. This holds under both the destination and...

Building on recent contributions to the New Economic Geography literature, this paper analyses the relation between asymmetric market size, trade integration, and corporate income tax differentials across countries. First, relying on Ottaviano and Van Ypersele’s (J. Int. Econ. 67:25–46, <CitationRef...</citationref>

This paper extends the work of Kempf and Rota-Graziosi (J. Pub. Econ. 94:768–776, <CitationRef CitationID="CR9">2010</CitationRef>), which argues that under capital tax competition the sub-game perfect equilibria (SPEs) correspond to two Stackelberg outcomes. The findings show that the Kempf and Rota-Graziosi result depends on the form...</citationref>

The discontinuous tax treatment of sales at borders creates incentives for individuals to cross-border shop. This paper addresses whether it is optimal for a state composed of multiple regions to levy differentiated commodity tax rates across the regions. In a model where states maximize social...

An agreement about a lower bound for admissible tax rates can reduce the equilibrium tax rate (and thus welfare) in tax competition among fully symmetric countries. This is shown in an infinitely repeated game where the stage game describes the standard tax competition model with source-based...