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Efficient tax competition under the origin principle

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  • Stéphane Gauthier

Abstract

This paper studies fiscal competition under the origin principle. It identifies a pattern of consumers' taste heterogeneity under which the first‐best world social optimum arises as a noncooperative Nash equilibrium. Consumers' tastes are characterized by the strength of their preference for home and foreign goods. Nash implementation of the first‐best obtains when in every tax jurisdiction the number of consumers who display a home bias (those consumers who prefer purchasing the home good to shopping abroad at equal prices) equals, for every magnitude of the home bias, the number of consumers who display an “import bias” (those who instead prefer shopping abroad) equal in magnitude.

Suggested Citation

  • Stéphane Gauthier, 2018. "Efficient tax competition under the origin principle," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(1), pages 85-99, February.
    • Handle: RePEc:bla:jpbect:v:20:y:2018:i:1:p:85-99
    DOI: 10.1111/jpet.12262
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    Cited by:

    1. Armando José Garcia Pires, 2023. "Ad-Valorem Taxes, Prices and Content Diversification in the News Market," Games, MDPI, vol. 14(2), pages 1-28, March.
    2. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2019. "On the Principles of Commodity Taxation under Interregional Externalities," University of Cyprus Working Papers in Economics 03-2019, University of Cyprus Department of Economics.

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