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Further Analysis on Public-Good Provision in a Repeated-Game Setting

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  • Keisuke Kawachi
  • Hikaru Ogawa

Abstract

In a model of privately provided public goods within a repeated-game setting, Pecorino (1999) shows that it is not only possible to maintain cooperation, but it is "easy" in a large economy. Models of privately provided public goods are closely related to interregional tax competition models with spillovers in public-good provision. This paper reexamines the argument of Pecorino in an infinitely repeated interaction model of interregional tax competition. The results show that in a large economy, while the trigger strategy supports the efficient tax rate if there exists substantial spillover of public goods, it fails to do so if there are few benefit spillovers.

Suggested Citation

  • Keisuke Kawachi & Hikaru Ogawa, 2006. "Further Analysis on Public-Good Provision in a Repeated-Game Setting," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 339-352, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200609)62:3_339:faoppi_2.0.tx_2-r
    DOI: 10.1628/001522106X153400
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    Cited by:

    1. Hikaru Ogawa, 2007. "Strategic Taxation on Mobile Capital with Spillover Externality," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(1), pages 33-45, March.
    2. Tamai, Toshiki, 2018. "Dynamic provision of public goods under uncertainty," Economic Modelling, Elsevier, vol. 68(C), pages 409-415.
    3. Wenming Wang & Keisuke Kawachi & Hikaru Ogawa, 2014. "Fiscal Transfer in a Repeated-Interaction Model of Tax Competition," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 70(4), pages 556-566, December.
    4. Wang, Wenming & Kawachi, Keisuke & Ogawa, Hikaru, 2017. "Does equalization transfer enhance partial tax cooperation?," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 431-443.
    5. Ogawa, Hikaru & Wang, Wenming, 2016. "Asymmetric tax competition and fiscal equalization in a repeated game setting," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 1-10.
    6. Satoshi Kasamatsu & Hikaru Ogawa, 2020. "International capital market and repeated tax competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 751-768, June.
    7. Tamai, Toshiki, 2010. "Public goods provision, redistributive taxation, and wealth accumulation," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1067-1072, December.
    8. Tong Yang, 2020. "Effect of agency costs on the optimal matching grant rate in a model of tax competition with benefit spillovers," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-6, December.
    9. Masafumi Tsubuku, 2018. "Market integration and tariff cooperation between asymmetric countries," Review of International Economics, Wiley Blackwell, vol. 26(4), pages 957-975, September.

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    More about this item

    Keywords

    voluntary provision; tax competition; spillovers; group size; repeated game;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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