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Political competition and leadership in tax competition

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  • Rupayan Pal

    () (Indira Gandhi Institute of Development Research)

  • Ajay Sharma

    () (Indira Gandhi Institute of Development Research)

Abstract

In this paper, we introduce political competition in a sequential move tax competition game between two regions for foreign owned mobile capital. It shows that in case of sequential move, political delegation takes place only in the follower region, not in the leader region. Moreover, political competition need not necessarily lead to higher tax rate in equilibrium. These results are in the sharp contrast to the existing results.

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Bibliographic Info

Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2011-024.

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Length: 28 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:ind:igiwpp:2011-024

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Related research

Keywords: Mobile capital; Tax competition; Political competition; Leadership; Public good;

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References

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