Endogenous Timing in Tax and Public-Investment Competition

Kawachi, Keisuke; Ogawa, Hideoki; Susa, Taiki

doi:10.1628/093245615x14307274621224

Cited by 8 publications

(3 citation statements)

References 9 publications

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“…This corresponds to the case that a i takes an interior solution in our model. Substituting (6) and 9- (11) into 5, we get U i = c i (a i , a j ). A maximization of U i with respect to a i in the first stage produces the reaction function:…”

Section: Moderate Leviathanmentioning

confidence: 99%

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Endogenizing government’s objectives in tax competition with capital ownership

Kawachi

Ogawa

Susa

2018

Int Tax Public Finance

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In this paper, we extend the standard approach of horizontal tax competition by endogenizing the policy objectives that governments pursue. Following the literature on strategic delegation games, we consider a preplay stage, where jurisdictions commit themselves to act as Leviathan or as benevolent agents. We show that the sub-game perfect equilibria (SPEs) correspond to the three cases of tax competition between (i) the Leviathan and the benevolent government, (ii) both Leviathans, and (iii) both benevolent governments, depending on the form of capital ownership. The results provide grounds for the assumption of government objective made in literature, and explain why some governments behave as Leviathans, while others as benevolent agents in international tax competition.

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Section: Moderate Leviathanmentioning

confidence: 99%

“…-(11), T i (0, 1), k i (0, 1) and r(0, 1) are yielded asT 1 (0, 1) = 2(3−4δθ 1 )κ/5, T 2 (0, 1) = 4(2−δθ 1 )κ/5, k 1 (0, 1) = (δθ 1 +3)κ/5, k 2 (0, 1) = (2 − δθ 1 )κ/5, and r(0, 1) = A − 6κ(2 − δθ 1 )/5. If substituting these values to the utility function U i (c i ), the equilibrium values above are derived.…”

mentioning

confidence: 99%

Endogenizing government’s objectives in tax competition with capital ownership

Kawachi

Ogawa

Susa

2018

Int Tax Public Finance

Self Cite

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show abstract

“…One study that closely relates to ours is Kawachi et al (2015), where sequential versus simultaneous choice of tax and non-tax instruments is considered, one at a time and then sequentially. A key difference in their framework is that they consider timing of regions while considering either just one instrument (tax or public investment) or when both instruments are considered public investment choice is still before tax and not jointly.…”

Section: Introductionmentioning

confidence: 99%