Enhanced Cooperation in an Asymmetric Model of Tax Competition

This paper analyzes enhanced cooperation agreements in corporate taxation in a three country tax competition model where countries differ in size. We characterize equilibrium tax rates and the optimal tax responses due to the formation of an enhanced cooperation agreement. Conditions for strategic complementarity or strategic substitutability of tax rates are crucial for the welfare effects of enhanced cooperation. Simulations show that enhanced cooperation is unlikely to be feasible for small countries. When enhanced cooperation is feasible, it may hamper global harmonization. Only when countries are of similar size is global harmonization a feasible outcome

Existence of Equilibria in a Basic Tax-competition Model

International audienc

Strategic environmental trade policy under free entry of firms

Since direct trade barriers are banned, governments may be tempted to (ab)use indirect trade-interfering policy tools, such as environmental taxes, to pursue their trade-managing aims. Using a model of an endogenous market structure where the number of firms is determined by a zero-profit condition in one country but is exogenously given in the other country, we show that the government harboring the fixed number of firms fails to affect aggregate supply and therefore has little scope for improving domestic environmental quality (if pollution is transboundary); moreover, due to the absence of the terms-of-trade effect, it diverts from the classical strategic tax rule. We argue that both governments 'very likely' fix their equilibrium emission taxes 'too low', meaning that tax competition plausibly leads to 'ecological dumping'. (orig.)Available from TIB Hannover: RN 5363(309) / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekSIGLEDEGerman

The Role of Symmetry between the Revenue and the Expenditure Side of the Government Budget in the Debate about the Potential Negative Effects of Tax Competition

capital mobility, public input provision, tax competition,