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Market Access and Tax Competition

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Author Info

  • Ottaviano, Gianmarco Ireo Paolo
  • van Ypersele, Tanguy

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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Bibliographic Info

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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Related research

Keywords: capital mobility; monopolistic competition; tax competition; trade;

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Citations

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Cited by:
  1. Carl Gaigné & Ian Wooton, 2010. "The gains from preferential tax regimes reconsidered," Working Papers SMART - LERECO 10-06, INRA UMR SMART.
  2. Nelly Exbrayat & Benny Geys, 2011. "Trade Integration and Business Tax Differentials : Theory and Evidence from OECD Countries," Working Papers 1123, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  3. Facundo Albornoz and Gregory Corcos, 2005. "Subsidy Competition in Integrating Economies," Discussion Papers 05-14, Department of Economics, University of Birmingham.
  4. Exbrayat, Nelly & Geys, Benny, 2012. "Trade integration and business tax differentials: Evidence from OECD countries," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2012-110, Social Science Research Center Berlin (WZB).
  5. Souleymane COULIBALY, 2008. "Empirical Assessment of the Existence of Taxable Agglomeration Rents," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 08.01, Université de Lausanne, Faculté des HEC, DEEP.
  6. Signe Krogstrup, 2002. "What do Theories of Tax Competition Predict for Capital Taxes in EU Countries? A Review of the Tax Competition Literature," IHEID Working Papers 05-2002, Economics Section, The Graduate Institute of International Studies.
  7. Carl Gaigné & Stéphane Riou, 2007. "Globalization, Asymmetric Tax Competition, and Fiscal Equalization," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(5), pages 901-925, October.
  8. Nelly Exbrayat, 2008. "The Impact of Trade Integration and Agglomeration Economies on Tax Interactions : Evidence from OECD Countries," Post-Print hal-00270067, HAL.
  9. Signe Krogstrup, 2004. "Increasing Returns in a Standard Tax Competition Model," IHEID Working Papers 02-2004, Economics Section, The Graduate Institute of International Studies.
  10. Ottaviano, Gianmarco I. P., 2002. "Regional policy in the global economy : insights from new economic geography," HWWA Discussion Papers 211, Hamburg Institute of International Economics (HWWA).
  11. repec:hal:wpaper:halshs-00590785 is not listed on IDEAS
  12. Candau Fabien, 2005. "Lumpy World and Race to the Bottom," International Trade 0508008, EconWPA, revised 01 Feb 2006.
  13. Richard Nahuis & Paul Tang, 2005. "Environmental policy competition and differential tax treatment; a case for tighter coordination?," CPB Discussion Paper 50, CPB Netherlands Bureau for Economic Policy Analysis.
  14. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany.

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