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A note on stable and sustainable global tax coordination with Leviathan governments
Institution:1. Department of Economics, University of Hagen, Universitätsstr. 41, 58097 Hagen, Germany;2. Department of Economics, University of Siegen, Hölderlinstr. 3, 57068 Siegen, Germany;1. Department of Finance, Goethe University Frankfurt, Grueneburgplatz 1, 60323 Frankfurt am Main, Germany;2. Department of Economics, University of Leicester, Leicester, UK;3. CFS, Frankfurt am Main, Germany;1. University of the Basque Country, School of Economics, Av. Lehendakari Aguirre 83, 48015 Bilbao, Spain;2. University of Heidelberg, Department of Economics, Bergheimer Str. 58, 69115 Heidelberg, Germany;1. University of Hull, Business School, Cottingham Road, Hull HU6 7RX, UK;2. Tecnológico de Monterrey, EGADE Business School, Mexico;3. University of Bath, Department of Economics, Claverton Down, Bath BA2 7AY, UK
Abstract:Itaya et al. (2014) study the conditions for sustainability and stability of capital tax coordination in a repeated game model with tax-revenue maximizing governments. One of their major results is that the grand tax coalition is never stable and sustainable. The purpose of this note is to prove that there are conditions under which the grand tax coalition is stable and sustainable in Itaya et al.'s model.
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