Electoral Commitment in Asymmetric Tax-competition Models

Abstract

* Revised： [20-21 , 2020]This study examines the political process of tax competition among asymmetric countries, highlighting the role of the commitment to the electoral promises.The median voters deliberately elect a delegate whose preferences differ from their own (strategic delegation), which is self-enforcing under symmetric countries. We first show that the outcome of strategic delegation is replicated when the candidates do not make binding campaign promises in both countries, and the opposite scenario of the binding commitments to the platforms leads to the self-representation by the median voters. We then amplify the model by adding the pre-election stage where the citizens choose whether the credibility of election promises is critical, through subscription numbers of newspapers and social media which determine the cost of betrayal of the proposed platforms (or the lack of the proposal). We then show that, depending on the type of asymmetries under consideration, sufficient asymmetry or sufficiently equal income distribution generates the commitment to the election campaign promises as the equilibrium outcome