Tax rates as strategic substitutes |
| |
Authors: | Hendrik Vrijburg Ruud A de Mooij |
| |
Institution: | 1.Erasmus School of Economics, Tinbergen Institute,Erasmus University Rotterdam,Rotterdam,The Netherlands;2.International Monetary Fund,Washington,USA |
| |
Abstract: | This paper analytically derives conditions under which the slope of the tax-reaction function is negative in a classical tax competition model. If countries maximize welfare, a negative slope (reflecting strategic substitutability) occurs under relatively mild conditions. The strategic tax response is crucial for understanding tax competition games, as well as the welfare effects of partial tax unions (whereby a subset of countries coordinate their tax rates). Indeed, contrary to earlier findings that have assumed strategic complementarity in tax rates, we show that partial tax unions might reduce welfare under strategic substitutability. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|