Based on Dixit-Stiglitz framework of exogenous equilibrium, the basic tax competition model is developed introducing agglomeration forces. However, the short-run dynamic micro-foundation to reach such equilibrium has long been ignored in the new economic-geography tax competition literature. In...

Do governments in the emerging Asia and Pacific region independently set their corporate tax rates? The answer is no. This paper contributes to the growing empirical tax competition literature by (i) generating a predictable tax reaction function within the new tax competition framework...