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Tax Competition Reconsidered

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Author Info
Amrita Dhillon () (Department of Economics, University of Warwick)
Myrna H. Wooders () (Department of Economics, Vanderbilt University)
Ben Zissimos () (Department of Economics, Vanderbilt University)

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Abstract

In a classic model of tax competition, we show that the level of public good provision and taxation in a decentralized equilibrium can be efficient or inefficient with either too much, or too little public good provision. The key is whether there exists a unilateral incentive to deviate from the efficient state and, if so, whether this entails raising or lowering taxes. A priori, there is no reason to suppose the incentive is in either one direction or the other.

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File URL: http://www.vanderbilt.edu/Econ/wparchive/workpaper/vu06-w02.pdf
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File Function: First version, 2006
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Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number 0602.

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Date of creation: Jan 2006
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Handle: RePEc:van:wpaper:0602

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Related research
Keywords: Efficiency Nash equilibrium over-provision tax competition under-provision

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
R50 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - General

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michela Redoano, 2007. "Fiscal Interactions Among European Countries. Does the EU Matter?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  2. Ben Zissimos & Myrna H. Wooders, 2006. "Relaxing Tax Competition through Public Good Differentiation," Working Papers 0601, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  3. Koffie Nassar, 2008. "Corporate Income Tax Competition in the Caribbean," IMF Working Papers 08/77, International Monetary Fund. [Downloadable!]
  4. Lockwood, Ben & Makris, Miltiadis, 2004. "Tax Incidence, Majority Voting And Capital Market Integration," The Warwick Economics Research Paper Series (TWERPS) 712, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  5. Wooders, Myrna & Zissimos, Ben, 2003. "Hotelling Tax Competition," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  6. Amrita Dhillon & Myrna H. Wooders & Ben Zissimos, 2006. "Tax Competition Reconsidered," Working Papers 0602, Department of Economics, Vanderbilt University. [Downloadable!]
    Other versions:
  7. Kenneth G. Stewart & Michael C. Webb, 2003. "Capital Taxation, Globalization, and International Tax Competition," Econometrics Working Papers 0301, Department of Economics, University of Victoria. [Downloadable!]
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