Competencia fiscal con las firmas heterogÍneas

Translated title of the contribution: Tax competition with heterogeneous firms

Richard E. Baldwin, Toshihiro Okubo

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

This paper studies tax competition in an economic geography model that allows for agglomeration economies with trade costs and heterogeneous firms. We find that the Nash equilibrium involves a large country charging a higher tax than a small nation. Lower trade costs lead to an intensification of competition, a drop in Nash tax rates and a narrowing of the gap. Since large, productive firms are naturally more sensitive to tax differences in our model, large firms are the crux of tax competition in our model. This also means that tax competition has consequences for the average productivity of big and small nations’ industries; by lowering tax rates, a small nation can attract high-productivity firms.

Translated title of the contributionTax competition with heterogeneous firms
Original languageSpanish
Pages (from-to)309-326
Number of pages18
JournalSpatial Economic Analysis
Volume9
Issue number3
DOIs
Publication statusPublished - 2014 Jul 14

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Economics, Econometrics and Finance(all)
  • Statistics, Probability and Uncertainty
  • Earth and Planetary Sciences (miscellaneous)

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