Dynamic tax competition between symmetric countries with multiple strategic investors [post]

Kaushal Kishore
2021 unpublished
Two symmetric countries compete over two-period under a non-preferential taxation regime to attract multiple investors where investors are strategic and investments are sunk once invested. Contrary to the existing results, we find that tax holidays do not arise during the initial period. Equilibria in mixed strategies arise in both periods where competing countries set strictly positive tax rates during the initial period. Strategic interaction between large investors reduces competition and
more » ... reases tax rates during the initial period. We provide full characterization and uniqueness of equilibria in mixed strategies.JEL classification: F21, H21, H25, H87
doi:10.21203/rs.3.rs-1052578/v1 fatcat:g5y7w23ewbezji4lmcsihngmta