Federal tax autonomy and the limits of cooperation
AbstractWe consider the hold-up problem between a foreign direct investor and the government(s) in a host country with weak governmental structure and lack of power to commit. Using Nash threats, we show that an efficient investment level can be sustained for a sufficiently high discount factor and ask whether a federal structure makes collusion more or less sustainable. We show that collusion between the government and the investor is easier to sustain if the host country is more centralized or if the government layers can commit to fixed sharing rules. -- Wir betrachten das âHold-up Problemâ, das in den Beziehungen zwischen einem auslÃ¤ndischen Investor und der Regierung, bzw. den Regierungen eines Gastlandes mit schwachen institutionellen Strukturen besteht. Unter Verwendung von Nash-Drohungen wird gezeigt, dass eine Ãberwindung des Holdup Problems durch wiederholte Interaktion zwischen den Akteuren mÃ¶glich ist. Weiterhin wird untersucht, ob fÃ¶derale Strukturen eine solche Ãberwindung wahrscheinlicher machen oder nicht. SchlieÃlich wird gezeigt, dass eine Ãberwindung des Hold-up Problems besser gelingt, wenn die verschiedenen Regierungsebenen des Gastlandes sich bindend auf eine gemeinschaftssteuerliche Aufteilung des Steueraufkommens festlegen kÃ¶nnen.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Urban Economics.
Volume (Year): 59 (2006)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/inca/622905
Other versions of this item:
- Kessing, Sebastian G. & Konrad, Kai A. & Kotsogiannis, Christos, 2005. "Federal tax autonomy and the limits of cooperation," Discussion Papers, Research Unit: Market Processes and Governance SP II 2005-18, Social Science Research Center Berlin (WZB).
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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