Wenming Wang, Keisuke Kawachi, Hikaru Ogawa
Fiscal Transfer in a Repeated-Interaction Model of Tax Competition
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This paper analyzes how a fiscal transfer scheme affects tax cooperation in a repeated-interaction model of tax competition. In particular, the paper studies whether a fiscal transfer scheme promotes or blocks voluntary tax cooperation. It is shown that the larger the scale of fiscal transfer is, the easier voluntary tax cooperation is, implying that interregional transfers for correcting fiscal gaps are consistent with voluntary tax cooperation.