Peer-Reviewed Journal Details
Mandatory Fields
Dewit G.;Hynes K.;Leahy D.
2018
April
Economic Inquiry
Corporate tax games with cross-border externalities from public infrastructure
Published
1 ()
Optional Fields
56
2
1047
1063
© 2017 Western Economic Association International We construct a model of corporate tax competition in which governments also use public infrastructure investment to attract foreign direct investment, thus enhancing their tax bases. In doing so, we allow for cross-border infrastructural externalities. Depending on the externality, governments are shown to strategically over- or underinvest in infrastructure. We also examine how tax cooperation influences investment in infrastructure and find that welfare may be lower under tax cooperation than under tax competition; this is the case when infrastructure is very effective in raising the tax base and generates a large negative cross-border externality. (JEL F23, H40).
0095-2583
10.1111/ecin.12516
Grant Details