A Repeated Interactions Model of Tax Competition
Models of tax competition usually assume a single period framework. This paper sets up a repeated interactions model of tax competition, and establishes conditions under which fiscal policy harmonization can result from repeated interactions between governments. It is shown that fiscal policy harmonization can not prevail when regional asymmetries are too strong. In such a case, the only way out is to set up a central fiscal authority.
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|Date of creation:||1999|
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