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Tax Competition, Imperfect Capital Mobility and the gain from non-preferential agreements

  • Kaushal Kishore

    ()

    (Southern Methodist University)

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    The gain to competing governments from entering into binding non-preferential tax agree- ments (that prevents discriminatory taxation in favor of mobile capital) depends on the extent of capital mobility between jurisdictions. In particular the gain is increasing in the cost of re- location of capital and the fraction of the domestic tax base which is relatively immobile. We show this in a symmetric model of capital tax competition between two governments where all capital is imperfectly mobile and di¤er only in their cost of relocation.

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    File URL: ftp://ftp1.economics.smu.edu/WorkingPapers/2008/Kishore/Kishore-2008-07.pdf
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    Paper provided by Southern Methodist University, Department of Economics in its series Departmental Working Papers with number 0804.

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    Date of creation: Jul 2008
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    Handle: RePEc:smu:ecowpa:0804
    Contact details of provider: Postal: Department of Economics, P.O. Box 750496, Southern Methodist University, Dallas, TX 75275-0496
    Phone: 214-768-2715
    Fax: 214-768-1821
    Web page: http://www.smu.edu/economics

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