Discussion Papers 2016

CIRJE-F-1035

"Does Equalization Transfer Enhance Partial Tax Cooperation?"

Author Name

Wang, Wenming, Keisuke Kawachi and Hikaru Ogawa

Date

December 2016

Full Paper

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Remarks

Subsequently published in International Review of Economics & Finance, Volume 51, 431-443, 2017.

Abstract

This paper analyzes the effect of equalization transfer scheme on partial tax cooperation condition in a repeated game setting. It is shown that in order to achieve partial tax cooperation between two capital-rich (exporting) countries, the full equalization transfer scheme is superior to the partial equalization transfer scheme, whereas in order to achieve partial tax cooperation between two capital-poor (importing) countries, the partial equalization transfer scheme is superior to the full equalization transfer scheme.

Keywords: Partial tax cooperation, Full equalization transfer, Partial equalization transfer, Repeated game