Social comparisons in consumption, international capital flows and tax competition

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• 作者：Juin-Jen Chang ; Yi-Ling Cheng and Shin-Kun Peng
• 刊名：International Journal of Economic Theory
• 出版年：2017
• 出版时间：March 2017
• 年：2017
• 卷：13
• 期：1
• 页码：47-71
• 全文大小：412K
• ISSN：1742-7363

文摘

This paper explores the implications of consumption externalities for capital mobility, the distribution of firms and tax competition. In the absence of tax competition, the country with higher consumption externality attracts more capital/firms. In contrast, under tax competition, because the country with higher consumption externality will impose a higher tax rate on capital, due to the strong negative effect of taxation, the country with lower externality attracts more capital. Besides, as trade openness increases, capital agglomerates in the country with lower consumption externality. We also show that there may exist an efficiency-enhancing role for tax competition.