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Externalities of Non-Cooperative Tax Policy in the Globally Integrated Market


  • Akinori Tomohara


This paper investigates efficiency losses caused by independent tax systems and proposes ways of remedying this coordination failure Whereas the harmful effects of tariff competition have been thoroughly explored in the trade policy literature little is known about the externalities that result from jurisdictional corporate tax policies on the trade of multinational companies I show that cooperative tax policy with self-interested governments has the potential for increasing not only the levels of tax revenues and corporate profits but also the volume of trade through a more efficient allocation of tax burden

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  • Akinori Tomohara, 2002. "Externalities of Non-Cooperative Tax Policy in the Globally Integrated Market," Economics Working Paper Archive 476, The Johns Hopkins University,Department of Economics.
  • Handle: RePEc:jhu:papers:476

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    References listed on IDEAS

    1. Prusa, Thomas J., 1990. "An incentive compatible approach to the transfer pricing problem," Journal of International Economics, Elsevier, vol. 28(1-2), pages 155-172, February.
    2. Kant, Chander, 1990. "Multinational firms and government revenues," Journal of Public Economics, Elsevier, vol. 42(2), pages 135-147, July.
    3. Gresik, Thomas A. & Nelson, Douglas R., 1994. "Incentive compatible regulation of a foreign-owned subsidiary," Journal of International Economics, Elsevier, vol. 36(3-4), pages 309-331, May.
    4. Horst, Thomas, 1971. "The Theory of the Multinational Firm: Optimal Behavior under Different Tariff and Tax Rates," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1059-1072, Sept.-Oct.
    5. Elitzur, Ramy & Mintz, Jack, 1996. "Transfer pricing rules and corporate tax competition," Journal of Public Economics, Elsevier, vol. 60(3), pages 401-422, June.
    6. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, vol. 69(1), pages 137-141, March.
    7. L. W. Copithorne, 1971. "International Corporate Transfer Prices and Government Policy," Canadian Journal of Economics, Canadian Economics Association, vol. 4(3), pages 324-341, August.
    8. Bond, Eric W. & Gresik, Thomas A., 1996. "Regulation of multinational firms with two active governments: A common agency approach," Journal of Public Economics, Elsevier, vol. 59(1), pages 33-53, January.
    9. Karni, Edi & Chakrabarti, Subir K., 1997. "Political structure, taxes, and trade," Journal of Public Economics, Elsevier, vol. 64(2), pages 241-258, May.
    10. Stoughton, Neal M. & Talmor, Eli, 1994. "A mechanism design approach to transfer pricing by the multinational firm," European Economic Review, Elsevier, vol. 38(1), pages 143-170, January.
    11. Mohammad F Al-Eryani & Pervaiz Alam & Syed H Akhter, 1990. "Transfer Pricing Determinants of U.S. Multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 21(3), pages 409-425, September.
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