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
Abstract
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: |
https://doi.org/10.1111/ecin.12516 |
| Depositing User: |
Gerda Dewit
|
| Date Deposited: |
23 Jun 2020 14:24 |
| Journal or Publication Title: |
Economic Inquiry |
| Publisher: |
Wiley-Blackwell |
| Refereed: |
Yes |
| URI: |
|
| Use Licence: |
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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