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Partial Tax Coordination in a Repeated Game Setting

Author

Listed:
  • Itaya, Jun-ichi
  • Okamura, Makoto
  • Yamaguchi, Chikara

Abstract

This paper addresses the problem of partial tax coordination among regional or national sovereign governments in a repeated game setting. We show that partial tax coordination is more likely to prevail if the number of regions in a coalition subgroup is smaller and the number of existing regions in the entire economy is larger. We also show that under linear utility, partial tax coordination is more likely to prevail if the preference for a local public good is stronger. The main driving force for these results is the response of the intensity of tax competition. The increased (decreased) intensity of tax competition makes partial tax coordination more (less) sustainable.

Suggested Citation

  • Itaya, Jun-ichi & Okamura, Makoto & Yamaguchi, Chikara, 2008. "Partial Tax Coordination in a Repeated Game Setting," Discussion paper series. A 201, Graduate School of Economics and Business Administration, Hokkaido University.
  • Handle: RePEc:hok:dpaper:201
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    File URL: http://hdl.handle.net/2115/34777
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    File URL: https://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/34777/1/DPA201.pdf
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    More about this item

    Keywords

    Partial tax coordination; Repeated game; Tax competition; H71; H77;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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