Competition in unit vs. ad valorem taxes
Lockwood, Ben (2001) Competition in unit vs. ad valorem taxes. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. (Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)).
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This note shows that in the Sodrow-Miesowski-Wilson model, the Nash equilibrium in capital taxes depends on whether these taxes are unit (as assumed in the literature) or ad valorem (as in reality). In a symmetric version of the model with cobb-Douglas technology, public good provision is higher, and residents in both countries are better off, when countries compete in unit taxes.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HJ Public Finance|
|Divisions:||Faculty of Social Sciences > Economics
Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation
|Library of Congress Subject Headings (LCSH):||Ad valorem tax, Unit pricing, Competition, International, Taxation -- Mathematical models, Public goods|
|Series Name:||Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)|
|Publisher:||University of Warwick. Centre for the Study of Globalisation and Regionalisation|
|Place of Publication:||Coventry|
|Number of Pages:||13|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|References:||S. Bucovetsky (1991) “Asymmetric tax competition”, Journal of Urban Economics 30, 67-81 S.Delipalla and M.Keen (1992) “The comparison between ad valorem and specific taxation under imperfect competition” Journal of Public Economics 28, 127-134 B.Lockwood and K.Wong (2000) ““Specific and Ad Valorem Tariffs are not Equivalent in Trade Wars”, Journal of International Economics, 52, 183-95 B.Lockwood (2001) “Tax competition and coordination with destination and origin principles: a synthesis”, Journal of Public Economics, 81, 279-319 S.E.Skeath and G.A. Trandel (1994) “A Pareto comparison of ad valorem and unit taxes in noncompetitive environments”, Journal of Public Economics, 53, 53-71 D.B.Suits and R.A..Musgrave(1953), “Ad valorem and unit taxes compared”, Quarterly Journal of Economics 67, 598-604 J.D.Wilson(1986) “A theory of interregional tax competition” Journal of Urban Economics, 19, 296-315 J.D.Wilson (1999) “Theories of tax competition” National tax Journal, 52, 269-304 K.Wicksell(1959) “Taxation in the monopoly case”, translated and reprinted in: Musgrave and Shoup, eds, Readings in the Economics of Taxation (Irwin, Homewood, IL)|
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