ORBilu: Detailled Reference

Article (Scientific journals)

Is a dynamic approach to tax games relevant?

PAULUS, Nora; PIERETTI, Patrice; ZOU, Benteng

2021 • In Annals of Economics and Statistics, 144, p. 113-138

Peer reviewed

Permalink
https://hdl.handle.net/10993/48763

DOI
10.15609/ANNAECONSTAT2009.144.0113

Files (1)Send to Details Statistics Bibliography Similar publications

Files

Full Text

AES-2021-IS dynamic approach to tax games relevent.pdf

Publisher postprint (476 kB)

All documents in ORBilu are protected by a user license.

Send to

RIS BibTex APA Chicago Permalink X Linkedin

Details

Keywords :

differential game; dynamic tax competition; Markovian Nash Equilibrium

Abstract :

[en] In this paper, we argue that static models provide an incomplete analysis of interjurisdictional tax competition. Accordingly, one can doubt whether a one-shot view is suitable for analyzing real world tax competition. Contrary to previous contributions in tax competition, we are able to model the interplay between changing tax rates and sluggish factor adjustments. We demonstrate that the intensity of tax competition is impacted by the temporal nature of the game. The commitment of governments to stick to their tax policies for a given period (open-loop behavior) leads to less intense competition relative to a static approach. If the policymakers continuously update their tax rates (Markovian behavior), competition is fiercer than in a static game, except for the case where capital adjustment is relatively sluggish and the governments' marginal valuation of public goods is high enough.

Disciplines :

Quantitative methods in economics & management

Author, co-author :

PAULUS, Nora ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)

PIERETTI, Patrice ; University of Luxembourg > Faculty of Law, Economics and Finance > Department of Economics and Management

ZOU, Benteng ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)

External co-authors :

no

Language :

English

Title :

Is a dynamic approach to tax games relevant?

Publication date :

December 2021

Journal title :

Annals of Economics and Statistics

ISSN :

1968-3863

eISSN :

2115-4430

Publisher :

Institut National de la Statistique et des Etudes Economiques (ADRES), Paris, France

Volume :

144

Pages :

113-138

Peer reviewed :

Peer reviewed

Available on ORBilu :

since 01 December 2021

Statistics

Number of views

159 (17 by Unilu)

Number of downloads

0 (0 by Unilu)

More statistics

Scopus citations^®

0

Scopus citations^®
without self-citations

0

Bibliography

AGRAWAL, D. R., AND D. E. WILDASIN (2020): "Technology and tax systems," Journal of Public Economics, 185, 104082.
ALTSHULER, R., AND H. GRUBERT (2006): "Governments and Multinational Corporations in the Race to the Bottom," Tax Notes, 110(8).
ARCALEAN, C. (2018): "Dynamic fiscal competition: A political economy theory," Journal of Public Economics, 164, 211-224.
BARROS, P. P., AND L. CABRAL (2000): "Competing for foreign direct investment," Review of International economics, 8(2), 360-371.
BECKER, D. T. (2008): "Dynamic tax competition and public-sector modernisation," Thuenen-Series of Applied Economic Theory Working Paper, (56).
BECKER, J., AND R. B. DAVIES (2017): "Learning to tax-interjurisdictional tax competition under incomplete information,".
BECKER, J., C. FUEST, AND N. RIEDEL (2012): "Corporate tax effects on the quality and quantity of FDI," European Economic Review, 56(8), 1495-1511.
BECKER, J., AND N. RIEDEL (2012): "Cross-border tax effects on affiliate investment-evidence from European multinationals," European Economic Review, 56(3), 436-450.
BEGGS, A., AND P. KLEMPERER (1992): "Multi-period competition with switching costs," Econometrica: Journal of the Econometric Society, pp. 651-666.
BLACK, D. A., AND W. H. HOYT (1989): "Bidding for firms," The American Economic Review, 79(5), 1249-1256.
BUCOVETSKY, S., AND M. SMART (2006): "The efficiency consequences of local revenue equalization: Tax competition and tax distortions," Journal of Public Economic Theory, 8(1), 119-144.
CADESTIN, C., K. DE BACKER, S. MIROUDOT, L. MOUSSIEGT, D. RIGO, AND M. YE (2019): "Multinational enterprises in domestic value chains,".
CARDARELLI, R., E. TAUGOURDEAU, AND J.-P. VIDAL (2002): "A repeated interactions model of tax competition," Journal of Public Economic Theory, 4(1), 19-38.
CHIRINKO, R. S., AND D. J. WILSON (2017): "Tax competition among US states: Racing to the bottom or riding on a seesaw?," Journal of Public Economics, 155, 147-163.
COATES, D. (1993): "Property tax competition in a repeated game," Regional Science and Urban Economics, 23(1), 111-119.
DEVEREUX, M. P., AND H. FREEMAN (1995): "The impact of tax on foreign direct investment: empirical evidence and the implications for tax integration schemes," International tax and public finance, 2(1), 85-106.
EGGERT, W., AND J.-I. ITAYA (2014): "Tax rate harmonization, renegotiation, and asymmetric tax competition for profits with repeated interaction," Journal of Public Economic Theory, 16(5), 796-823.
FARRELL, J., AND C. SHAPIRO (1988): "Dynamic competition with switching costs," The RAND Journal of Economics, pp. 123-137.
FERSHTMAN, C., AND E. MULLER (1984): "Capital accumulation games of infinite duration," Journal of Economic Theory, 33(2), 322-339.
FERSHTMAN, C., AND E. MULLER (1986): "Turnpike properties of capital accumulation games," Journal of Economic Theory, 38(1), 167-177.
HAAPARANTA, P. (1996): "Competition for foreign direct investments," Journal of public Economics, 63(1), 141-153.
HAN, Y., P. PIERETTI, S. ZANAJ, AND B. ZOU (2014): "Asymmetric competition among nation states: A differential game approach," Journal of Public Economics, 119, 71-79.
HARTMAN, D. G. (1984): "Tax policy and foreign direct investment in the United States," National tax journal, 37(4), 475-487.
HARTMAN, D. G. (1985): "Tax policy and foreign direct investment," Journal of Public economics, 26(1), 107-121.
HAUFLER, A., AND I. WOOTON (1999): "Country size and tax competition for foreign direct investment," Journal of Public Economics, 71(1), 121-139.
HINDRIKS, J., AND Y. NISHIMURA (2015): "A note on equilibrium leadership in tax competition models," Journal of Public Economics, 121, 66-68.
KAMIEN, M. I., AND N. L. SCHWARTZ (2012): Dynamic optimization: the calculus of variations and optimal control in economics and management. courier corporation.
KANBUR, R., AND M. KEEN (1993): "Jeux sans frontieres: Tax competition and tax coordination when countries differ in size," The American Economic Review, pp. 877-892.
KATO, H. (2015): "The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy," European Economic Review, 74, 57-78.
KEEN, M., AND K. A. KONRAD (2013): "The theory of international tax competition and coordination," Handbook of public economics, 5, 257-328.
KEMPF, H., AND G. ROTA-GRAZIOSI (2010): "Endogenizing leadership in tax competition," Journal of Public Economics, 94(9-10), 768-776.
KLEMPERER, P. (1987): "Markets with consumer switching costs," The quarterly journal of economics, 102(2), 375-394.
MARCEAU, N., S. MONGRAIN, AND J. D. WILSON (2010): "Why do most countries set high tax rates on capital?," Journal of International Economics, 80(2), 249-259.
OLSDER, G. J. (2002): "On open-and closed-loop bang-bang control in nonzero-sum differential games," SIAM journal on control and optimization, 40(4), 1087-1106.
SLEMROD, J. (1990): "Optimal taxation and optimal tax systems," Journal of economic Perspectives, 4(1), 157-178.
SLEMROD, J. (2008): 3. Tax Effects on Foreign Direct Investment in the United States: Evidence from a Crosscountry Comparison. University of Chicago Press.
VON WEIZSÄCKER, C. C. (1984): "The costs of substitution," Econometrica: Journal of the Econometric Society, pp. 1085-1116.
WANG, Y.-Q. (1999): "Commodity taxes under fiscal competition: Stackelberg equilibrium and optimal-ity," American Economic Review, 89(4), 974-981.
WILDASIN, D. E. (2000): "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," Economic Policy, 15(31), 338-378.
WILDASIN, D. E. (2003): "Fiscal competition in space and time," Journal of Public Economics, 87(11), 2571-2588.
WILDASIN, D. E. (2011): "Fiscal competition for imperfectly-mobile labor and capital: A comparative dynamic analysis," Journal of Public Economics, 95(11-12), 1312-1321.
WILSON, J. D. (1987): "Trade, capital mobility, and tax competition," Journal of Political Economy, 95(4), 835-856.
WILSON, J. D. (1999): "Theories of tax competition," National tax journal, 52(2), 269-304.
WILSON, J. D., AND D. E. WILDASIN (2004): "Capital tax competition: bane or boon," Journal of public economics, 88(6), 1065-1091.

Similar publications