A spatial tax harmonization model
نویسنده
چکیده
Policies to harmonize value-added tax rates are controversial in the European Union. This paper formulates a multi-country model over a one-dimensional space as a non-cooperative Nash game, in which each country aims at maximizing its tax revenue, subject to the constraint that its tax rate lies within a given common band. Then we examine the e4ects of changes in the common band on tax rates, tax revenues and the number of cross-border shoppers at Nash equilibrium. We also analyze the e4ects of geographical variation in country size and location. c © 2002 Elsevier Science B.V. All rights reserved. JEL classi#cation: H71; H73; R51
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