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Reference: Andreas Haufler and Frank Stähler, (2010). Tax competition in a simple model with hererogeneous firms: how larger markets reduce profit taxes.Citable link to this page:

 

Tax competition in a simple model with hererogeneous firms: how larger markets reduce profit taxes

Abstract: We set up a simple two-country model of tax competition where firms with different productivity decide in which location to produce and sell output. In this model a unique, asymmetric Nash equilibrium can be shown to exist, provided that countries are sufficiently different with respect to their exogenous market conditions. Sorting of firms occurs in equilibrium, as the smaller country levies the lower tax rate and attracts the low-cost firms. A simultaneous expansion of both markets that raises the profitability of firms intensifies tax competition and causes both countries to reduce their tax rates, despite higher corporate tax bases. This finding corresponds to the empirical evidence for the OECD countries over the last two decades.

Bibliographic Details

Issue Date: 2010-11Identifiers

Urn: uuid:7c8f7777-70f1-4b01-9ae4-4dacf8e0b5a7 Item Description

Type: Article;

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Autor: Andreas Haufler - - - Frank Stähler - - - - Bibliographic Details Issue Date: 2010-11 - Identifiers Urn: uuid:7c8f7777-70f1-4b01

Fuente: https://ora.ox.ac.uk/objects/uuid:7c8f7777-70f1-4b01-9ae4-4dacf8e0b5a7



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