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Political competition and leadership in tax competition

Author

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  • Rupayan Pal

    (Indira Gandhi Institute of Development Research)

  • Ajay Sharma

    (Indira Gandhi Institute of Development Research)

Abstract

In this paper, we introduce political competition in a sequential move tax competition game between two regions for foreign owned mobile capital. It shows that in case of sequential move, political delegation takes place only in the follower region, not in the leader region. Moreover, political competition need not necessarily lead to higher tax rate in equilibrium. These results are in the sharp contrast to the existing results.

Suggested Citation

  • Rupayan Pal & Ajay Sharma, 2011. "Political competition and leadership in tax competition," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-024, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2011-024
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2011-024.pdf
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    References listed on IDEAS

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    Cited by:

    1. Hikaru Ogawa & Taiki Susa, 2017. "Strategic delegation in asymmetric tax competition," Economics and Politics, Wiley Blackwell, vol. 29(3), pages 237-251, November.

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    More about this item

    Keywords

    Mobile capital; Tax competition; Political competition; Leadership; Public good;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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