Even Small Trade Costs Restore Efficiency in Tax Competition

  • Johannes Becker
  • Marco Runkel
Schlagworte: Tax Competition, Public Goods Provision, Trade

Abstract

We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax competition. It turns out that even small levels of transport cost lead to a complete breakdown of the seminal result, the underprovision of public goods. Instead, there is a symmetric equilibrium with efficient public goods provision in all jurisdictions.

Veröffentlicht
2018-09-05
Ausgabe
Rubrik
Artikel