Nash equilibria in models of fiscal competition

Wildasin, David E.

doi:10.1016/0047-2727(88)90055-2

Cited by 485 publications

(291 citation statements)

References 9 publications

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“…If jurisdictions are sufficiently large to affect the net rate of return, tax rates are set strategically taking into account tax rates in other jurisdictions (e.g. Wildasin 1988). …”

Section: Sources Of Tax Competitionmentioning

confidence: 99%

Tax competition among local governments: Evidence from a property tax reform in Finland

Lyytikäinen

2012

Journal of Public Economics

126

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This paper uses a Finnish policy intervention to study tax competition among local governments. Changes in the statutory lower limits to the property tax rates are used as a source of exogenous variation to estimate the responses of municipalities to tax rates in their neighbouring municipalities. I do not find evidence of interdependence in property tax rates among Finnish municipalities. The results are in contrast to the earlier empirical literature, using data from other countries, that has mainly found positive interdependence in tax rates. I compare the causal estimates based on the policy change to the commonly used Spatial Lag estimates and Spatial Instrumental Variables estimates, which are based on highly restrictive assumptions. The comparisons suggest that the standard spatial econometrics methods may have a tendency to overestimate the degree of interdependence in tax rates.JEL Codes: H20, H71, H77

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“…If jurisdictions are sufficiently large to affect the net rate of return, tax rates are set strategically taking into account tax rates in other jurisdictions (e.g. Wildasin 1988). …”

Section: Sources Of Tax Competitionmentioning

confidence: 99%

Tax competition among local governments: Evidence from a property tax reform in Finland

Lyytikäinen

2012

Journal of Public Economics

126

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“…While it is readily verified that both formulations yield qualitatively similar 22 An analogous argument for mobile capital can be found in Wilson (1987) and Wildasin (1988).…”

Section: A Remark On Voter Myopiamentioning

confidence: 83%

“…Once factors have moved internationally, national per-capita grants (g j , g h ) are determined residually from public budgets. As first noted by Wildasin (1988), this assumption is often not innocuous: equilibria will generally differ if instead governments choose expenditures g j , taking as given the foreign g h , and then passively adjust t j to balance their budgets. 37 In this alternative scenario, 37 Because the residual tax rate t j cannot take arbitrary values, though, this approach suffers from the problem that the feasible range for g j varies with the chosen g h of the other country (admissible strategies are interdependent).…”

Section: Discussion and Concluding Remarksmentioning

confidence: 99%

Redistribution, Fiscal Competition, and the Politics of Economic Integration

2002

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The paper examines the consequences of the economic integration of factor markets in a model with two countries that redistribute income among their residents. The social benefits in each country are financed by a source based tax on capital which is democratically chosen by its inhabitants. If either capital or labour is internationally mobile, the countries engage in fiscal competition and the partial integration of capital or labour markets is detrimental to the countries' redistributive ability. A move from partial to full integration, however, may alleviate rather than intensify fiscal competition, particularly, if the two countries face sufficiently similar economic and political conditions. In such a situation, for example, tax competition for mobile capital is softened as the labour market becomes more integrated and even vanishes if both factors are fully mobile. As a result, there is more redistribution in equilibrium and a majority of the population * This paper has benefitted from comments by Jan Brueckner, Ig Horstmann, Dave Wildasin, and various participants of seminars at Bonn, Heidelberg, Konstanz, Mannheim, the

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“…We have derived the conditions under which a corporate tax-cum-subsidy, a location tax-cum-subsidy, a production tax-cum-subsidy, and an employment tax-cum-subsidy improve home and foreign welfare, respectively. The literature on tax competition, as represented by, for example, Wilson (1986) and Wildasin (1988), shows that tax competition that reduces taxes is harmful to countries because the reduction in tax revenue from tax competition leads to an undersupply of public goods. By contrast, tax revenue is not an important factor in the welfare analysis based on our model because the tax revenue is returned to residents in a lump sum.…”

Section: Resultsmentioning

confidence: 99%

The Welfare Effects of Attracting Foreign Direct Investment in the Presence of Unemployment

Ogawa

Ono

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract We develop a 2 × 2 × 2 model with the following features: (1) one sector is perfectly competitive while the other is oligopolistic; (2) one country has unemployment while the other attains full employment; (3) oligopolists move internationally; and (4) the ownership of each oligopolist is internationally shared. The welfare effects of various tax-cum-subsidies are examined. If the oligopolistic sector is capital intensive, subsidizing the oligopolists' profits, inflows, production or employment is more likely to harm the country. The number of domestically based oligopolists, the volume of domestic demand for the oligopoly-produced commodity, and the country's ownership share of oligopolists also influence the effect. Terms of use: Documents in EconStor may

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Nash equilibria in models of fiscal competition

Cited by 485 publications

References 9 publications

Tax competition among local governments: Evidence from a property tax reform in Finland

Tax competition among local governments: Evidence from a property tax reform in Finland

Redistribution, Fiscal Competition, and the Politics of Economic Integration

The Welfare Effects of Attracting Foreign Direct Investment in the Presence of Unemployment

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