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    Corporate tax games with cross-border externalities from public infrastructure

    Dewit, Gerda and Hynes, Kate and Leahy, Dermot (2018) Corporate tax games with cross-border externalities from public infrastructure. Economic Inquiry, 56 (2). pp. 1047-1063. ISSN 0095-2583

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    We construct a model of corporate tax competition in which governments also use public infrastructure investment to attract foreign direct investment, thus enhancing their tax bases. In doing so, we allow for cross-border infrastructural externalities. Depending on the externality, governments are shown to strategically over- or underinvest in infrastructure. We also examine how tax cooperation influences investment in infrastructure and find that welfare may be lower under tax cooperation than under tax competition; this is the case when infrastructure is very effective in raising the tax base and generates a large negative cross-border externality.

    Item Type: Article
    Keywords: Corporate tax; games; cross-border externalities; public infrastructure;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 13085
    Identification Number:
    Depositing User: Gerda Dewit
    Date Deposited: 23 Jun 2020 14:24
    Journal or Publication Title: Economic Inquiry
    Publisher: Wiley-Blackwell
    Refereed: Yes
    Use License: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA).Details of this licence are available here

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