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Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size


  • Ravi Kanbur
  • Michael Keen


Closer international integration is putting increasing pressure on existing national tax structures. this paper uses a simple two-country model to address a range of policy concerns that consequently arise, focusing particularly on the role of national size. Differences in size exacerbate the inefficiency due to non-cooperative behavior, harming both countries. The smaller country would lose form harmonization to any tax rate between those of the non-cooperative equilibrium, but both countries would gain from the imposition of a minimum tax anywhere in that range. The fully optimal response to freer cross-border trade, however, may be to do absolutely nothing.

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  • Ravi Kanbur & Michael Keen, 1991. "Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size," Working Papers 819, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:819

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    1. William D. Nordhaus & James Tobin, 1973. "Is Growth Obsolete?," NBER Chapters,in: The Measurement of Economic and Social Performance, pages 509-564 National Bureau of Economic Research, Inc.
      • William D. Nordhaus & James Tobin, 1972. "Is Growth Obsolete?," NBER Chapters,in: Economic Research: Retrospect and Prospect, Volume 5, Economic Growth, pages 1-80 National Bureau of Economic Research, Inc.
    2. Rudolf R. Rhomberg, 1964. "A Model of the Canadian Economy Under Fixed and Fluctuating Exchange Rates," Journal of Political Economy, University of Chicago Press, vol. 72, pages 1-1.
    3. Lawrence R. Klein, 1958. "The Measurement of Capacity," Cowles Foundation Discussion Papers 49, Cowles Foundation for Research in Economics, Yale University.
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