Tax Competition, Investment Irreversibility and the Provision of Public Goods
Data
01.07.2013
01.07.2013
Autori
Michele Moretto, Paolo Panteghini, Sergio Vergalli
Codice JEL
H25, H32
H25, H32
Parole chiave:
Irreversibility, Risk, Short- and Long-Term Effects, Tax Competition
Irreversibility, Risk, Short- and Long-Term Effects, Tax Competition
Publisher
Economy and Society
Economy and Society
Editor
Giuseppe Sammarco
Giuseppe Sammarco
This article studies the effects of tax competition on the provision of public goods under business risk and partial irreversibility of investment. As will be shown, the provision of public goods changes over time and also depends on the business cycle. In particular, under source-based taxation, public goods can be optimally provided during a downturn, in the short term. The converse is true during a recovery, when they are underprovided. In the long term however, tax competition does not affect capital accumulation and therefore, the provision of public goods.