Capital Tax Competition Among an Arbitrary Number of Asymmetric Countries

23 Pages Posted: 21 Feb 2003

See all articles by Susana Peralta

Susana Peralta

CORE-UCL; Nova School of Business and Economics

Tanguy Van Ypersele

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM); Centre for Economic Policy Research (CEPR)

Date Written: January 2003

Abstract

This Paper addresses the issue of capital tax competition among an arbitrary number of countries. Countries are allowed to be asymmetric not only in their population endowment but also in their capital endowment per inhabitant. National governments tax capital and labour in order to finance a public good. Asymmetric capital taxation arises at equilibrium leading to a distortion on the international capital market. We provide conditions for the existence of a Nash equilibrium. We fully characterize how equilibrium taxes and welfare levels depend upon countries' population and capital endowments.

Keywords: Capital mobility, tax competition, Nash equilibrium

JEL Classification: F21, H23, H30, H73

Suggested Citation

Peralta, Susana and Van Ypersele, Tanguy, Capital Tax Competition Among an Arbitrary Number of Asymmetric Countries (January 2003). CEPR Discussion Paper No. 3695. Available at SSRN: https://ssrn.com/abstract=382321

Susana Peralta

CORE-UCL

34 Voie du Roman Pays
1348 Louvain-la-Neuve, 1348
Belgium

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

HOME PAGE: http://docentes.fe.unl.pt/~peralta/

Tanguy Van Ypersele (Contact Author)

National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2 rue de la Charité
Marseille, 13002
France
+33 4 4293 5983 (Phone)
+33 4 4293 0968 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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