Tax Competition for Heterogeneous Firms with Endogenous Entry

  title={Tax Competition for Heterogeneous Firms with Endogenous Entry},
  author={R. B. Davies and Carsten Eckel},
This paper models tax competition for mobile firm s that are differentiated by the amount of labor needed to cover fixed costs. Be cause tax competition affects the distribution of firms, it affects both relative equ ilibrium wages across countries and equilibrium prices. These in turn influence the equ ilibrium number of firms. From the social planner's perspective, optimal tax rates are h monized, providing the optimal number of firms, and set such that income is effici ently distributed… CONTINUE READING

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