Commodity Tax Competition Between Member States of a Federation
This paper characterizes the outcome of tax competition between autonomous fiscal authorities. It treats the case of a two-region economy, where an origin-based commodity tax is levied by each region on a private good to finance a local public good. A second private good is untaxed. We describe regional market equilibria where consumers of each region allocate their purchases according to relative prices, taxes and transportation costs. Optimal tax rates and levels of public good are derived. Fiscal competition arises from the ability of one region to choose its tax rate which can alter the tax base of the other. A non-cooperative fiscal equilibrium (NCFE) is computed and compared to the Pareto optimum. In general, fiscal choices that are Pareto improving in the NCFE never reduce taxes in both regions.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1984|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (613) 533-2250
Fax: (613) 533-6668
Web page: http://qed.econ.queensu.ca/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:558. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock)
If references are entirely missing, you can add them using this form.