Tax coordination with different preferences for public goods: Conflict or harmony of interest?
AbstractThe paper analyzes strategic commodity taxation in a model with trade in a single private good that is simultaneously imported by consumers of a high-tax country and exported by its producers. Conditions for the existence of a Nash equilibrium are given, and an asymmetry is introduced through different preferences for public goods. Two tax coordination measures are discussed - a minimum tax rate and a coordinated increase in the costs of cross-border shopping. It is shown that tax coordination generally benefits the high-tax country while the low-tax country will gain only if the intensity of tax competition is high in the initial equilibrium or if governments are price-sensitive toward the effective marginal costs of public good supply.
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 3 (1996)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102915
commodity tax competition; tax coordination;
Other versions of this item:
- Haufler, Andreas, 1996. "Tax Coordination with Different Preferences for Public Goods: Conflict or Harmony of Interest?," Munich Reprints in Economics 20392, University of Munich, Department of Economics.
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