Tax competition reconsidered

Reference:

Dhillon, A., Wooders, M. and Zissimos, B., 2007. Tax competition reconsidered. Journal of Public Economic Theory, 9 (3), pp. 391-423.

Related documents:

Official URL:

http://dx.doi.org/10.1111/j.1467-9779.2007.00312.x

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.

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