A bargaining model of tax competition

• 成果类型: Article
• 署名作者: Han, Seungjin; Leach, John
• 署名单位: McMaster University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.12.003
• 发表日期: 2008
• 页码: 1122-1141
• 关键词: Tax competition; bargaining

摘要

This paper develops a model in which competing governments offer financial incentives to induce individual firms to locate within their jurisdictions. Equilibrium is described under three specifications of the supplementary taxes. There is no misallocation of capital under two of these specifications, and there might or might not be capital misallocation under the third. This result contrasts strongly with that of the standard tax competition model, which does not allow governments to treat firms individually. That model finds that competition among governments almost always leads to capital misallocation. (C) 2007 Elsevier B.V. All rights reserved.