Majority voting and endogenous timing in tax competition
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We model a timing game in tax competition where the initial capital is unevenly endowed within the country and the tax policies are determined under a majority voting regime. The model is characterized by a novel feature: The decisive voter imports capital at the individual level, while the country exports it at the national level. The paper finds that governments endogenously choose to play a sequential-move game, which is unlikely to associate with full capital ownership in the tax competition literature.
KeywordsTax competition Endogenous timing Voting
JEL ClassificationH30 H87
The authors would like to thank the anonymous referees for their valuable comments, which have helped to substantially improve this paper. The research has been supported by Grants from the Japan Society for the Promotion of Science (Nos. 25245042 and 15H03366).
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