Reference : ON THE DESIRABILITY OF TAX COORDINATION WHEN COUNTRIES COMPETE IN TAXES AND INFRASTRUCTURE
Scientific journals : Article
Business & economic sciences : International economics
http://hdl.handle.net/10993/28432
ON THE DESIRABILITY OF TAX COORDINATION WHEN COUNTRIES COMPETE IN TAXES AND INFRASTRUCTURE
English
Han, Yutao []
Pieretti, Patrice mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Zou, Benteng mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
2017
Economic Inquiry
Yes (verified by ORBilu)
International
0095-2583
1465-7295
[en] Tax coordination ; tax competition ; infrastructure
[en] The paper contains two distinct messages. First, when jurisdictions compete in two
independent strategic variables, the decision to coordinate on one variable (a tax rate) induces
a carry-over effect on the unconstrained instrument (infrastructure expenditures).
Consequently, classical results of the tax coordination literature may be qualified. A second
message is that the relative flexibility of the strategic instruments, which may depend
on the time horizon of the decision-making, does matter. In particular, tax coordination
is more likely to be detrimental (in terms of revenue and/or welfare) when countries can
compete simultaneously in taxes and infrastructure, rather than sequentially. The reason is
that simultaneity eliminates strategic effects between tax and non-tax instruments.
http://hdl.handle.net/10993/28432
10.1111/ecin.12407

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