Fiscal Externalities In The Globally Integrated Market

Akinori Tomohara
2011 Journal of Applied Business Research  
<p class="MsoBodyText" style="text-justify: inter-ideograph; text-align: justify; line-height: normal; margin: 0in 34.2pt 0pt 0.5in;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">While tax competition of mobile capital has been explored in the literature, little attention has been paid to the effects on business incentives for global trading.<span style="mso-spacerun: yes;">&nbsp; </span>We show that tax competition creates negative fiscal externalities via
more » ... d production decisions of multinational companies, when the markets across countries are interrelated through intra-firm trade.<span style="mso-spacerun: yes;">&nbsp; </span>Pareto improvement may emerge once the governance of the interrelated markets is coordinated across different governments. </span></span></p>
doi:10.19030/jabr.v23i1.1408 fatcat:nhf6rgpzwvbqnovsijb72r65bq