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Tax Competition Reconsidered

  • Amrita Dhillon

    ()

    (Department of Economics, University of Warwick)

  • Myrna H. Wooders

    ()

    (Department of Economics, Vanderbilt University)

  • Ben Zissimos

    ()

    (Department of Economics, Vanderbilt University)

In a classic model of tax competition, we show that the level of public good provision and taxation in a decentralized equilibrium can be efficient or inefficient with either too much, or too little public good provision. The key is whether there exists a unilateral incentive to deviate from the efficient state and, if so, whether this entails raising or lowering taxes. A priori, there is no reason to suppose the incentive is in either one direction or the other.

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File URL: http://www.accessecon.com/pubs/VUECON/vu06-w02.pdf
File Function: First version, 2006
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Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0602.

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Date of creation: Jan 2006
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Handle: RePEc:van:wpaper:0602
Contact details of provider: Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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  16. Lockwood, Ben & Wong, Kar-yiu, 2000. "Specific and ad valorem tariffs are not equivalent in trade wars," Journal of International Economics, Elsevier, vol. 52(1), pages 183-195, October.
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  19. Laussel, Didier & Le Breton, Michel, 1998. "Existence of Nash equilibria in fiscal competition models," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 283-296, May.
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  27. 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.
  28. Amrita Dhillon & Myrna H. Wooders & Ben Zissimos, 2006. "Tax Competition Reconsidered," Vanderbilt University Department of Economics Working Papers 0602, Vanderbilt University Department of Economics.
  29. Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, vol. 19(3), pages 356-370, May.
  30. Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
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