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Asymmetric tax competition and fiscal equalization in a repeated game setting

Listed author(s):
  • Ogawa, Hikaru
  • Wang, Wenming

This paper examines the relationship between tax competition and fiscal equalization in a standard tax competition model with repeated actions, in which regions differ in per capita capital endowments and production technologies. In particular, it asks how a fiscal equalization scheme affects the tax cooperation condition. It shows that when the scale of fiscal equalization scheme increases, capital exporter is more (and capital importer is less) cooperative in implementing tax coordination. The paper also demonstrates that the best cooperative tax rate – the one that provides the strongest potential for voluntary cooperation – takes a positive value and increases with the scale of fiscal equalization.

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File URL: http://www.sciencedirect.com/science/article/pii/S1059056015001549
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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 41 (2016)
Issue (Month): C ()
Pages: 1-10

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Handle: RePEc:eee:reveco:v:41:y:2016:i:c:p:1-10
DOI: 10.1016/j.iref.2015.10.004
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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  1. Christos Kotsogiannis, 2010. "Federal tax competition and the efficiency consequences for local taxation of revenue equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(1), pages 1-14, February.
  2. Okuno, Nobuhiro & Yagi, Tadashi, 1990. "Public investment and interregional output-income inequalities," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 377-393, November.
  3. Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2014. "Partial tax coordination in a repeated game setting," European Journal of Political Economy, Elsevier, vol. 34(C), pages 263-278.
  4. Áron Kiss, 2012. "Minimum taxes and repeated tax competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 641-649, October.
  5. Keisuke Kawachi & Hikaru Ogawa, 2006. "Further Analysis on Public-Good Provision in a Repeated-Game Setting," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 339-352, September.
  6. Cardarelli, Roberto & Taugourdeau, Emmanuelle & Vidal, Jean-Pierre, 2002. " A Repeated Interactions Model of Tax Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 19-38.
  7. Coates, Dennis, 1993. "Property tax competition in a repeated game," Regional Science and Urban Economics, Elsevier, vol. 23(1), pages 111-119, March.
  8. Kangoh Lee, 2004. "Taxation of Mobile Factors as Insurance under Uncertainty," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 253-271, June.
  9. Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2008. "Are regional asymmetries detrimental to tax coordination in a repeated game setting?," Journal of Public Economics, Elsevier, vol. 92(12), pages 2403-2411, December.
  10. Marko Köthenbürger, 2002. "Tax Competition and Fiscal Equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 391-408, August.
  11. Marco CATENARO & Jean-Pierre VIDAL, 2006. "Implicit tax co-ordination under repeated policy interactions," Discussion Papers (REL - Recherches Economiques de Louvain) 2006011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  12. Kalamov, Zarko Y., 2013. "Risk sharing and the efficiency of public good provision under tax competition," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 676-683.
  13. Wenming Wang & Keisuke Kawachi & Hikaru Ogawa, 2014. "Fiscal Transfer in a Repeated-Interaction Model of Tax Competition," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(4), pages 556-566, December.
  14. Marco Cotenaro & Jean-Pierre Vidal, 2006. "Implicit tax co-ordination under repeated policy interactions," Recherches économiques de Louvain, De Boeck Université, vol. 72(1), pages 5-18.
  15. Hikaru Ogawa, 2013. "Further analysis on leadership in tax competition: the role of capital ownership," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(3), pages 474-484, June.
  16. Wildasin, David E. & Wilson, John Douglas, 1998. "Risky local tax bases: risk-pooling vs. rent-capture," Journal of Public Economics, Elsevier, vol. 69(2), pages 229-247, June.
  17. S. Bucovetsky, 1997. "Insurance and Incentive Effects of Transfers among Regions: Equity and Efficiency," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(4), pages 463-483, November.
  18. Sanjo, Yasuo, 2012. "Country risk, country size, and tax competition for foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 292-301.
  19. Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, vol. 19(3), pages 356-370, May.
  20. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
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