Partial Harmonization of Corporate Taxes in an Asymmetric Repeated Game Setting
This paper investigates the conditions under which partial harmonization for capital taxation is sustained in a repeated interactions model of tax competition when there are three heterogenous countries with respect to their capital endowments. We show that regardless of the structure of the coalition (i.e., any group of countries), whether partial tax harmonization is sustainable or not crucially depends on the capital endowment of the median country relative to those of the large and small countries. The most noteworthy finding is that the closer the capital endowment of the median country to the average capital endowment of the large and small countries, the less likely is the tax harmonization including the median country to prevail and the more likely is the partial tax harmonization excluding the median country to prevail.
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- Cardarelli, R. & Taugourdeau, E. & Vidal, J.-P., 1999. "A Repeated Interactions Model of Tax Competition," G.R.E.Q.A.M. 99a34, Universite Aix-Marseille III.
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- Peralta, Susana & van Ypersele, Tanguy, 2003. "Coordination of Capital Taxation Among Asymmetric Countries," CEPR Discussion Papers 3695, C.E.P.R. Discussion Papers.
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- Konrad, Kai A. & Schjelderup, Guttorm, 1999. "Fortress Building in Global Tax Competition," Journal of Urban Economics, Elsevier, vol. 46(1), pages 156-167, July.
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- 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.Full references (including those not matched with items on IDEAS)
- Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2007. "Are Regional Asymmetries Detrimental to Tax Coordination in a Repeated Game Setting?," Discussion paper series. A 183, Graduate School of Economics and Business Administration, Hokkaido University.
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