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The Spillover Effects of Good Governance in a Tax Competition Framework with a Negative Environmental Externality

Author

Listed:
  • Raymond Batina

    (School of Economic Sciences, Washington State University)

Abstract

We investigate the impact of a political regime shift affecting consumers, business interests and lobby contributions when countries engage in tax competition in capital and a polluting resource. When consumers have more in fluence than resource owners, the resource tax rate and public spending rise while environmental damages, lobbying contribution, and the capital tax rate fall. This response can spillover to other countries leading to lower welfare. Capital tax harmonization improves welfare of consumers and resource owners. Resource tax harmonization and governance harmonization reducing the influence of lobbying both improve consumer welfare but resource owners are worse off.

Suggested Citation

  • Raymond Batina, 2014. "The Spillover Effects of Good Governance in a Tax Competition Framework with a Negative Environmental Externality," Working Papers 2014-6, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:batina-1
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    File URL: http://wfaculty.ses.wsu.edu/WorkingPapers/batina/wp2014-6.pdf
    File Function: First version, 2014
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    Cited by:

    1. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2016. "The Influence of Political Pressure Groups on the Stability of International Environmental Agreements," Working Papers V-391-16, University of Oldenburg, Department of Economics, revised Aug 2016.

    More about this item

    Keywords

    lobbying; environmental damage; tax competition; spillovers;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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