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Cooperative and competitive policies in the EU: The European Siamese twin?

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  • Lejour, A.M.

    (Tilburg University, Center for Economic Research)

Abstract

With the completion of the internal market many possibilities for the EU member states to protect their markets against imports are restricted or even eliminated. This gives, however, member states the incentive to use other policy instruments. This paper analyzes the effect of liberalizing trade barriers on decentralized redistributive policies using a two-country model with an integrated commodity market. It shows that redistributive policies become more competitive, if further liberalization of markets takes place, while these markets are already relatively integrated. This leads to the interesting paradox that more cooperative trade policies imply more competitive redistributive policies. However, if markets are nearly not integrated, it is possible that liberalization reduces tax competition.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1995-20.

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Date of creation: 1995
Date of revision:
Handle: RePEc:dgr:kubcen:199520

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Web page: http://center.uvt.nl

Related research

Keywords: Taxation; Trade Barriers; Economic Integration; International Trade; EU; international economics;

References

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  1. Mintz, J. & Tulkens, H., 1984. "Commodity tax competition between member states of a federation: equilibrium and efficiency," CORE Discussion Papers 1984027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Ghosh, A.R., 1990. "Strtegic Aspects Of Public Finance In A World With High Capital Mobility," Papers 49, Princeton, Woodrow Wilson School - Discussion Paper.
  3. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, October.
  4. Persson, Torsten & Tabellini, Guido, 1992. "Federal Fiscal Constitutions. Part I: Risk Sharing and Moral Hazard," CEPR Discussion Papers 728, C.E.P.R. Discussion Papers.
  5. Lejour, A.M., 1995. "Social insurance and the completion of the internal market," Discussion Paper 1995-61, Tilburg University, Center for Economic Research.
  6. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
  7. Peltzman, Sam, 1980. "The Growth of Government," Journal of Law and Economics, University of Chicago Press, vol. 23(2), pages 209-87, October.
  8. Wildasin, David, 1993. "Fiscal competition and interindustry trade," Regional Science and Urban Economics, Elsevier, vol. 23(3), pages 369-399, July.
  9. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  10. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  11. Arnott, Richard & Grieson, Ronald E., 1981. "Optimal fiscal policy for a state or local government," Journal of Urban Economics, Elsevier, vol. 9(1), pages 23-48, January.
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Cited by:
  1. Arjan Lejour & Harrie Verbon, 1997. "Tax Competition and Redistribution in a Two-Country Endogenous-Growth Model," International Tax and Public Finance, Springer, vol. 4(4), pages 485-497, November.
  2. Lejour, A.M., 1995. "Social insurance and the completion of the internal market," Discussion Paper 1995-61, Tilburg University, Center for Economic Research.

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