The paper shows that interjurisdictional competition for mobile factors of production forces the government to raise the efficiency of the public sector and, thus, helps to tame Leviathan governments. However, this result is derived under some restrictive assumptions concerning the kind of tax policy used by the government. In the case of benefit taxes, e.g. user charges, a Leviathan may be tam...

Abstract The theory of international tax competition suggests that governments attempt to attract mobile capital bases by undercutting the foreign capital tax rate. An analysis of the role that state capacity plays in tax policymaking under international pressures is, however, missing. The central contribution of our study is to highlight the importance of the interaction between state capaci...

The vast increase in foreign assets globally has raised interest in how the home country should tax profits flowing from these investments. Broadly speaking, countries have chosen either to exempt foreign income from taxation or to subject foreign income to taxation with credits/deductions given for foreign taxes paid. Recent research has focused on the effect of these foreign income tax rules ...

We quantify the importance of imperfect competition in US labor market by estimating size rents earned American firms and workers. construct a matched employer-employee panel dataset combining universe business worker tax records for period 2001–2015. Using this data, we identify estimate an equilibrium model with two-sided heterogeneity where workers view as substitutes because heterogeneous p...

When multinational firms expand their operations in tax havens, do they divert activity from non-havens? Much of the debate on tax competition presumes that the answer to this question is yes. This paper offers a model for examining the relationship between activity in havens and non-havens, and discusses the implications of recent evidence in light of that model. Properly interpreted, the evid...

This paper studies optimal taxation in a Dixit–Stiglitz model of monopolistic competition. In this setting, taxes may be used as an instrument to o¤set distortions caused by producer markups. Since markups tend to be higher in industries where …rms face less elastic demand, tax rates will be pushed lower in these industries. This tends to work against the familiar inverse elasticities intuition...

Within the framework of spatial tax competition with cross-border shopping, we examine the choice of tax method between ad valorem tax and unit (specific) tax. The paper shows that governments endogenously choose ad valorem tax not because of a classic welfare reason, but because it is a good strategy in competing for mobile customers. Another key finding is that while governments are committed...

We develop a model in which boundedly rational agents apply technical and fundamental analysis to identify trading signals in two different speculative markets. Whether an agent trades and, if so, in which market with which strategy depends on profit considerations. As it turns out, an ongoing evolutionary competition between the trading strategies causes complex price dynamics which closely re...

The introduction of the Single Market resulted in a switch from destination to origin-based taxation of cross-border transactions by individuals. The theory of commodity tax competition predicts that this change should give rise to excise tax competition and thus intensify strategic interaction in the setting of excise taxes. In this paper, we provide an empirical test of this prediction using ...

Models of international tax competition typically assume the existence of a benevolent government. This paper presents a model which integrates the view of government as source of ine ciency with an analysis of distorting taxes on capital investment, savings and labor income in a common theoretical framework. The model yields the conclusion that the e ects of international tax coordination on t...