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Tax Federalism and Cooperative Games: Value Approach

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  • Emilio Calvo

    (Universidad de Valencia. ERI-CES)

Abstract

We model the problem of how to distribute the public spending between the different regions of a country once all taxes are collected as a cooperative game in coalitional form. A tax game is built, specifying how much tax is collected in every region and coalition of regions in the country under secession. In this paper we propose two tax rules: the balanced tax rule, and the redistributive balanced tax rule. Both rules have the property of being stable for every tax problem, as they belong to the core of the tax game. The Spanish case is considered as example. We compare their redistributive behavior with the present Spanish financial system, with the population egalitarian, and with the optimistic secession tax rules.

Suggested Citation

  • Emilio Calvo, 2018. "Tax Federalism and Cooperative Games: Value Approach," Discussion Papers in Economic Behaviour 0218, University of Valencia, ERI-CES.
  • Handle: RePEc:dbe:wpaper:0218
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    File URL: https://www.uv.es/erices/RePEc/WP/2018/0218.pdf
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    More about this item

    Keywords

    fiscal federalism; fiscal stability; secessionism; coalitional;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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