Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46497 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3195
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper develops a competition theory framework that evaluates an important aspect of the OECD's Harmful Tax Practices Initiative against tax havens. We show that the sequential nature of the process is harmful and more costly than a 'big bang' multilateral agreement. The sequentiality may even prevent the process from being completed successfully. Closing down a subset of tax havens reduces competition among the havens that remain active. This makes their 'tax haven business' more profitable and shifts a larger share of rents to these remaining tax havens, making them more reluctant to give up their 'tax haven business'. Moreover, the outcome of this process, reducing the number of tax havens, but not eliminating them altogether, may reduce welfare in the OECD.
Subjects: 
tax haven
harmful tax practices
bidding for haven inactivation
JEL: 
F21
H26
H77
H87
Document Type: 
Working Paper
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