@article{Parry:10848,
      recid = {10848},
      author = {Parry, Ian W.H.},
      title = {How Large Are the Welfare Costs of Tax Competition?},
      address = {2001},
      number = {1318-2016-103475},
      series = {Discussion Paper 01-28},
      pages = {40},
      year = {2001},
      abstract = {Previous literature has shown that competition among  regional governments may lead to inefficiently low levels  of capital taxation, because governments do not take  account of the external benefits of capital flight to other  regions. However, the fiscal distortion is smaller the more  elastic the supply of capital (for the region bloc), if  governments are not perfectly competitive, or they behave  in part as a revenue-maximizing Leviathan. There has been  very little empirical work on the magnitude of the welfare  effects of fiscal competition. This paper presents  extensive calculations of the welfare effects using a model  that incorporates the possibility of Leviathan behavior,  strategic behavior by governments, monopsony power in  factor markets, and a wide range of capital supply  elasticities. The welfare costs of tax competition are  generally fairly small, and even these costs can disappear  fairly quickly when some weight is attached to the  possibility of Leviathan behavior.},
      url = {http://ageconsearch.umn.edu/record/10848},
      doi = {https://doi.org/10.22004/ag.econ.10848},
}