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Preferences over Public Good, Political Delegation, and Leadership in Tax Competition
Published in SAGE
2018
Volume: 47
   
Issue: 4
Pages: 718 - 746
Abstract

Leadership (sequential choice) and political delegation are two mechanisms suggested to restrict “race-to-the-bottom” in tax competition. In this article, we analyze whether these two mechanisms when combined together would lead to unilaterally higher taxation or not. We show that political delegation with leadership in tax competition not only restricts race-to-the-bottom but also mitigates the possibility of overprovision of public good. In sequential choice game, only the follower region delegates taxation power to the policy maker but not the leader region. This puts a check on intensity of tax competition and restricts the under provision of public good.

About the journal
JournalData powered by TypesetPublic Finance Review
PublisherData powered by TypesetSAGE
ISSN1091-1421
Open AccessYes
Concepts (3)
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    Economics and econometrics
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    Finance
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    Public administration