Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75545
Authors: 
Bjorvatn, Kjetil
Schjelderup, Guttorm
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 390
Abstract: 
A well known result in the tax competition literature is that tax rates are set too low in the Nash equilibrium to finance an efficient level of public consumption goods. In this model we introduce international spillovers in public goods provision and show that such spillovers reduce, and in the limiting case of perfect spillovers, eliminate tax competition. There is, however, always underprovision of the public good in equilibrium, since larger spillovers increase the problem of free riding. In an extension to the model, we demonstrate that congestion costs may result in overprovision of the public good.
Subjects: 
Tax competition for capital
international public goods
Document Type: 
Working Paper

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