Market Access and Tax Competition

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Market Access and Tax Competition

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Ottaviano, Gianmarco I P
van Ypersele, Tanguy

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Abstract

In this Paper, we show that with international externalities, different country sizes, imperfect competition and trade costs, tax competition for mobile firms is efficiency enhancing with respect to the free market outcome. Nonetheless, while the latter entails too many firms in the larger country, the former has too many firms in the smaller one. Under both scenarios the resulting inefficiencies in international specialization and trade flows vanish when trade costs are low enough. Otherwise, only international tax coordination can implement the efficient spatial distribution of firms.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3638.

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Date of creation: Nov 2002
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Handle: RePEc:cpr:ceprdp:3638

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

This paper has been announced in the following NEP Reports:

NEP-ALL-2003-03-14 (All new papers)
NEP-GEO-2003-03-14 (Economic Geography)
NEP-URE-2003-03-14 (Urban & Real Estate Economics)

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Facundo Albornoz and Gregory Corcos, 2005. "Subsidy Competition in Integrating Economies," Discussion Papers 05-14, Department of Economics, University of Birmingham. [Downloadable!]
Other versions:
- Facundo Albornoz & Grégory Corcos, 2005. "Subsidy competition in integrating economies," PSE Working Papers 2005-21, PSE (Ecole normale supérieure). [Downloadable!]
Souleymane COULIBALY, 2008. "Empirical Assessment of the Existence of Taxable Agglomeration Rents," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 08.01, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
Richard Nahuis & Paul Tang, 2005. "Environmental policy competition and differential tax treatment; a case for tighter coordination?," CPB Discussion Papers 50, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
Signe Krogstrup, 2003. "A Synthesis of Recent Developments in the Theory of Capital Tax Competition," EPRU Working Paper Series 04-02, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany. [Downloadable!]
Signe Krogstrup, 2002. "What do Theories of Tax Competition Predict for Capital Taxes in EU Countries? A Review of the Tax Competition Literature," HEI Working Papers 05-2002, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
Gianmarco Ottaviano, 2003. "Regional Policy in the Global Economy: Insights from New Economic Geography," Regional Studies, Taylor and Francis Journals, vol. 37(6-7), pages 665-673, August. [Downloadable!] (restricted)
Nelly Exbrayat, 2008. "The impact of trade integration and agglomeration economies on tax interactions: evidence from OECD countries," Post-Print hal-00270067_v1, HAL. [Downloadable!]
Candau Fabien, 2005. "Lumpy World and Race to the Bottom," International Trade 0508008, EconWPA, revised 01 Feb 2006. [Downloadable!]
Signe Krogstrup, 2004. "Increasing Returns in a Standard Tax Competition Model," HEI Working Papers 02-2004, Economics Section, The Graduate Institute of International Studies. [Downloadable!]

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