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    Corporate Tax Games with International Externalities from Public Infrastructure


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    Dewit, Gerda, Hynes, Kate and Leahy, Dermot (2014) Corporate Tax Games with International Externalities from Public Infrastructure. Maynooth University. (Unpublished)

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    Abstract

    We construct a model of corporate tax competition in which governments also use public infrastructural investment to attract foreign direct investment, thus enhancing their tax bases. In doing so, we allow for inter-regional infrastructural externalities. Depending on the externality, governments are shown to strategically over- or under-invest in infrastructure. We examine how tax cooperation influences investment in infrastructure and find that welfare may be lower under tax cooperation than under tax competition; this is, in fact, the case when infrastructure is sufficiently effective in raising the tax base and generates a suffi ciently large negative interregional externality.
    Item Type: Other
    Additional Information: The authors are grateful to Ben Ferret, Peter Neary, Ivan Pastine, Tuvana Pastine, Frank Stähler, Ian Wooton, participants of the European Trade Study Group Conference (Leuven, September 2013) and the Irish Economic Association Conference (May 2014), seminar participants at the University of Tübingen and at the National University of Ireland, Maynooth, for helpful comments.
    Keywords: Tax competition; Tax cooperation; Public infrastructure investment; Externalities; JEL Codes; F23; H40;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 5333
    Depositing User: Ms Sandra Doherty
    Date Deposited: 02 Sep 2014 14:31
    Publisher: Maynooth University
    URI: https://mural.maynoothuniversity.ie/id/eprint/5333
    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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