Journal article

Vertical Transfers and Tax Competition : Does Trade Integration Matter?

    2020
Published in:
  • Social Choice and Welfare. - Springer. - 2020, vol. 55, p. 453-475
English Our paper presents a model of decentralized leadership with fiscal equalization and imperfect trade liberalization. The degree of trade integration (reflected by trade costs) turns out to have an effect on both state corporate taxes and ex-post vertical equalization transfers. Our main results are the following: when public goods are highly valued by the citizens of the federation, ex post equalization transfers are welfare enhancing compared to tax competition, whatever the degree of trade integration. However, when citizens do not have strong preferences for the public good, ex post vertical transfers turn out to be welfare deterioring for low levels of trade integration while they are welfare improving compared to tax competition when trade integration is sufficiently deep.
Faculty
Faculté des sciences économiques et sociales
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
License undefined
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/309504
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