Federal tax autonomy and the limits of cooperation

Arbeitspapier

We consider the hold-up problem between a foreign direct investor and the government(s) in a host country with weak governmental structure and lack of power to commit. Using Nash threats, we show that an efficient investment level can be sustained for a sufficiently high discount factor and ask whether a federal structure makes collusion more or less sustainable. We show that collusion between the government and the investor is easier to sustain if the host country is more centralized or if the government layers can commit to fixed sharing rules.

Object Details

• Alternative title: Föderale Steuerautonomie und die Grenzen der Kooperation
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2005-18

Classification and Topics

• Classification: Wirtschaft ; Structure, Scope, and Performance of Government ; State and Local Taxation, Subsidies, and Revenue ; State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects ; Intergovernmental Relations; Federalism; Secession
• Subject: Tacit collusion ; foreign direct investment ; hold-up problem ; federalism ; vertical tax externality ; tax competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kessing, Sebastian G. ; Konrad, Kai A. ; Kotsogiannis, Christos
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/51147
• Last update: 10.03.2025, 11:44 AM CET