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Does tax competition increase infrastructural disparity among jurisdictions?

Author

Listed:
  • Yutao Han
  • Patrice Pieretti
  • Benteng Zou

Abstract

This paper investigates whether an economy that lags behind in infrastructure compared with other countries can make up its shortfall when it competes for foreign direct investments. The main message of the paper is that jurisdictional competition can enable the lagging country to reduce the infrastructural gap if capital mobility is sufficiently high and the gap is not too large. Further, we show that size asymmetry reinforces (weakens) the effect in reducing the infrastructural disparity resulting from interjurisdictional competition when the lagging economy is small (large).

Suggested Citation

  • Yutao Han & Patrice Pieretti & Benteng Zou, 2018. "Does tax competition increase infrastructural disparity among jurisdictions?," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 20-36, February.
  • Handle: RePEc:bla:reviec:v:26:y:2018:i:1:p:20-36
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    File URL: https://doi.org/10.1111/roie.12301
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    References listed on IDEAS

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    1. Wilson, John Douglas, 1991. "Tax competition with interregional differences in factor endowments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 423-451, November.
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    13. Hongbin Cai & Daniel Treisman, 2005. "Does Competition for Capital Discipline Governments? Decentralization, Globalization, and Public Policy," American Economic Review, American Economic Association, vol. 95(3), pages 817-830, June.
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    15. Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-892, September.
    16. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
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