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Tax competition and information sharing in Europe: a signalling game

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  • Andre Fourcans
  • Thierry Warin

Abstract

This paper provides a challenging view to the tax harmonisation issue. The literature often proposes tax harmonisation to avoid free-riding behaviours in free-trade areas and more particularly in monetary unions. Without tax harmonisation, tax autonomy may lead to a "race to the bottom". The model proposed here shows that tax competition may lead to stability. If a country gives the signal that 'friendly' or coordinated taxation behaviour is not its priority, the result can be a 'race to the bottom'. Conversely, if both countries signal their ability to conduct such a war, this war will not occur, and the stability of the system will be ensured.

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Bibliographic Info

Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Economics and Business Research.

Volume (Year): 2 (2010)
Issue (Month): 1/2 ()
Pages: 76-86

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Handle: RePEc:ids:ijecbr:v:2:y:2010:i:1/2:p:76-86

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Web page: http://www.inderscience.com/browse/index.php?journalID==310

Related research

Keywords: EMU; Economic and Monetary Union; economic integration; tax competition; tax harmonisation; fiscal competition; taxation; European Union; EU; free-trade areas; information sharing; business research; Euro.;

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References

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  1. Cremer, Helmuth & Gahvari, Firouz, 2000. "Tax evasion, fiscal competition and economic integration," European Economic Review, Elsevier, vol. 44(9), pages 1633-1657, October.
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Cited by:
  1. Thierry Warin & Robert E. Prasch, 2013. "Systemic Risk in the Financial Industry: “Mimetism” for the Best and for the Worst," CIRANO Working Papers 2013s-29, CIRANO.

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