Models of tax competition usually assume a single period framework. This paper sets up a repeated interactions model of tax competition, and establishes conditions under which fiscal policy harmonization can result from repeated interaction between governments. It is shown that fiscal policy harmonization can not prevail when regional asymmetries are too strong. In such a case, the only way out is to set up a central fiscal authority.
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Paper provided by Universite Aix-Marseille III in its series G.R.E.Q.A.M. with number
99a34.
Length: 21 pages Date of creation: 1999 Date of revision: Handle: RePEc:fth:aixmeq:99a34
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Find related papers by JEL classification: H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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