Despite the extensive international experience with the assignments of revenue sources to different levels of government, the public finance literature still lacks a general theory of revenue assignments. Two sets of arguments have been separately developed in the literature to explain and guide...

We construct a general equilibrium model of a two-country trading block where governments through tax policies attract mobile capital, and provide an imported public consumption good. At Nash equilibrium, when the public good is under-provided, (i) a country with a large GDP, has a large Nash...