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Does tax competition increase infrastructural disparity among jurisdictions?

Author

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  • Yutao Han
  • Patrice Pieretti
  • Benteng Zou

Abstract

This paper investigates whether an economy that lags behind in infrastructure compared with other countries can make up its shortfall when it competes for foreign direct investments. The main message of the paper is that jurisdictional competition can enable the lagging country to reduce the infrastructural gap if capital mobility is sufficiently high and the gap is not too large. Further, we show that size asymmetry reinforces (weakens) the effect in reducing the infrastructural disparity resulting from interjurisdictional competition when the lagging economy is small (large).

Suggested Citation

  • Yutao Han & Patrice Pieretti & Benteng Zou, 2018. "Does tax competition increase infrastructural disparity among jurisdictions?," Review of International Economics, Wiley Blackwell, vol. 26(1), pages 20-36, February.
    • Handle: RePEc:bla:reviec:v:26:y:2018:i:1:p:20-36
    DOI: 10.1111/roie.12301
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    References listed on IDEAS

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    1. Hayato Kato & Hirofumi Okoshi, 2022. "Economic Integration And Agglomeration Of Multinational Production With Transfer Pricing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1325-1355, August.

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