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Fiscal Policies and Trade: On the existence of Nash equilibria

Author

Listed:
  • Abderrahmane ZIAD

    (University of Caen Basse-Normandie, CREM (UMR CNRS))

  • Emmanuelle TAUGOURDEAU

    (CNRS CES, Université de Paris 1, ENS Cachan)

Abstract

This paper studies the existence of a fiscal Nash equilibrium in a multi-country model of trade where the relative prices are the channels of transmission of scal policies between countries. We stipulate the necessary conditions on goods, consumptions and trade that allow for the existence of a Nash equilibrium in the fiscal game. In the particular case of homotethic utility functions, we show that conditions on the shape and the degree of the curvature of the relative prices functions are sufficient to guarantee the existence of the Nash equilibrium.

Suggested Citation

  • Abderrahmane ZIAD & Emmanuelle TAUGOURDEAU, 2011. "Fiscal Policies and Trade: On the existence of Nash equilibria," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201112, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:201112
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    References listed on IDEAS

    as
    1. Laussel, Didier & Le Breton, Michel, 1998. "Existence of Nash equilibria in fiscal competition models," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 283-296, May.
    2. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
    3. Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 11(3), pages 199-216, November.
    4. Sorensen, Jan Rose, 1996. " Coordination of Fiscal Policy among a Subset of Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(1), pages 111-118, March.
    5. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 441-463.
    6. Taugourdeau, Emmanuelle & Ziad, Abderrahmane, 2011. "On the existence of Nash equilibria in an asymmetric tax competition game," Regional Science and Urban Economics, Elsevier, vol. 41(5), pages 439-445, September.
    7. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
    8. Bayindir-Upmann, Thorsten & Ziad, Abderrahmanne, 2005. "Existence of equilibria in a basic tax-competition model," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 1-22, January.
    9. Wilson, John D., 1985. "Optimal property taxation in the presence of interregional capital mobility," Journal of Urban Economics, Elsevier, vol. 18(1), pages 73-89, July.
    10. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
    11. Wong, Siu-kee, 2004. "Existence of trading Nash equilibrium in tariff retaliation models," Mathematical Social Sciences, Elsevier, vol. 47(3), pages 367-387, May.
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    More about this item

    Keywords

    Fiscal policy; Trade; Nash equilibrium.;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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