Market size and tax competition |
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Authors: | Gianmarco IP Ottaviano Tanguy van Ypersele |
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Institution: | a Universitá di Bologna Dipartimento di Scienze Economiche, strada Maggiore 45, 40125 Bologna, Italy b The University of Namur, 8 rempart de la Vierge, 5000 Namur, Belgium |
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Abstract: | With international externalities, different country sizes, imperfect competition, and trade costs, tax competition for mobile firms is efficiency-enhancing with respect to the free market outcome. Under both scenarios, the resulting inefficiencies in international specialization and trade flows vanish when trade costs are low enough. Otherwise, only international tax coordination can implement the efficient spatial distribution of firms. |
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Keywords: | F12 F22 H23 R13 R23 |
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