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    Decentralized emission standards with tax competition

    131092_13289_Race to the Bottom - July 2009.pdf (977.6Kb)
    Access Status
    Open access
    Authors
    Petchey, Jeffrey Dean
    Date
    2009
    Type
    Working Paper
    
    Metadata
    Show full item record
    Citation
    Petchey, Jeffrey Dean. 2009. Decentralized emission standards with tax competition, School of Economics and Finance Working Paper Series, Curtin University of Technology, School of Economics and Finance.
    Faculty
    Curtin Business School
    School of Economics and Finance
    URI
    http://hdl.handle.net/20.500.11937/3060
    Collection
    • Curtin Research Publications
    Abstract

    We consider a game between jurisdictions within a national economy. Capital migrates between jurisdictions to satisfy an equal return condition. The total supply of capital to the economy is a non-decreasing function of the national return. This allows us to cater for the case where capital has some home bias and jurisdictions have an incentive to engage in tax competition and set non-zero capital taxes in equilibrium. We then show that this competition does not distort emissions standards and that decentralized provision of environmental policy is locally efficient. Thus, we find no evidence of a race to the bottom or top in emissions standards as a result of tax competition.

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