Competition in Unit vs. Ad Valorem Taxes
نویسنده
چکیده
This note shows that in the Zodrow-Miesowski-Wilson model, the Nash equilibrium in capital taxes depends on whether these taxes are unit (as assumed in the literature) or ad valorem (as in reality). In a symmetric version of the model with Cobb-Douglas technology, public good provision is higher, and residents in both countries are better off, when countries compete in unit taxes.
منابع مشابه
The Comparison Between Ad Valorem and Unit Taxes under Monopolistic Competition
This paper shows that the welfare dominance of ad valorem over unit taxes under imperfect competition, extends to the Dixit-Stiglitz framework with differentiated products, entry and love of variety. This contrasts against findings by Anderson et al. (J Public Econ, 2001) made in a similar framework, but under Bertrand competition.
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