Tax Competition Reconsidered
33 Pages Posted: 11 Dec 2007
Date Written: 2006-07-07
Abstract
In a classic model of tax competition, this paper shows 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.
Suggested Citation: Suggested Citation
Dhillon, Amrita and Wooders, Myrna H. and Zissimos, Ben, Tax Competition Reconsidered (2006-07-07). Journal of Public Economic Theory, Vol. 9, Issue 3, pp. 391-423, June 2007, Available at SSRN: https://ssrn.com/abstract=1066065 or http://dx.doi.org/10.1111/j.1467-9779.2007.00312.x
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