Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46440
Authors: 
Itaya, Jun-ichi
Okamura, Makoto
Yamaguchi, Chikara
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper: Public Finance 3240
Abstract: 
This paper investigates the conditions under which partial harmonization for capital taxation is sustained in a repeated interactions model of tax competition when there are three heterogenous countries with respect to their capital endowments. We show that regardless of the structure of the coalition (i.e., any group of countries), whether partial tax harmonization is sustainable or not crucially depends on the capital endowment of the median country relative to those of the large and small countries. The most noteworthy finding is that the closer the capital endowment of the median country to the average capital endowment of the large and small countries, the less likely is the tax harmonization including the median country to prevail and the more likely is the partial tax harmonization excluding the median country to prevail.
Subjects: 
tax coordination
asymmetric countries
repeated game
tax competition
JEL: 
H73
F59
F21
Document Type: 
Working Paper

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