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N° 2005-08 |
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| June 2005 |
| Tax Competition and Public Input |
Agnès Bénassy-Quéré
Nicolas Gobalraja
Alain Trannoy |
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| We study the extent and policy implications of tax competition in the case of a double-competition on both tax rates and provision of public factors. First, we derive the relevant theoretical results in a unified framework where a corporate tax is used to finance a public good which both raises household utility and firm productivity. Then, the relevance of such double competition is tested with FDI data from the United States to the EU. We find ground for the coexistence of high tax/spending countries and low tax/spending ones. International competition could then act as a vector for rising public sector efficiency rather than a standardisation factor. |
Abstract |
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| Tax competition, public factors, public goods, FDI |
Keywords |
| F21, F23, H25, H41, H54 |
JEL classification |
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Full text (pdf) |
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