Tax competition and equalization: the impact of voluntary cooperation on the efficiency goal

Petra Ens ()
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Petra Ens: Georg-August-Universität Göttingen

No 2009/16, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Literature has long learned about the welfare improving effect of equalization in tax competition environments. By setting incentives to local authorities, public spending becomes efficient in spite of relying on a mobile resource as the tax base. This paper proves that this result cannot hold when local players have influence on the shape of the transfer system. A bargaining concerning equalization may change the incentives arising from equalization.

Keywords: tax competition; fiscal equalization; nash bargaining; cooperation (search for similar items in EconPapers)
JEL-codes: H10 H71 H77 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2009-16

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