Horizontal and Vertical Tax Interactions in a Common Agency Game - Université de Pau et des Pays de l'Adour Access content directly
Preprints, Working Papers, ... Year : 2016

Horizontal and Vertical Tax Interactions in a Common Agency Game


The decisions made by one government a¤ect the tax revenue that can be collected by the decisionmakers belonging to the same tier of government or by stacked jurisdictions : externalities arise, the existence and the magnitude of which are closely related to the nature of the tax, to the mobility of the base and to the distribution of tax competence among decisionmakers. Indeed, when same authorities belonging to a same level of government derive their receipts from a mobile tax base, a competition mechanism takes place among them that triggers externalities. Likewise, when di¤erent layers of decision-makers exert their taxing power upon a common base, the choices made by one tier a¤ect the receipts that the other governments can collect. As a by-product, this paper proposes a model where both horizontal and vertical interactions are tackled, first successively then simultaneously. Uncertainty concerning the base, that is, the amount of capital likely to be invested, is introduced and a generalization of taxation schemes is provided. The analysis shows that horizontal and vertical externalities point towards opposite directions : while horizontal competition leads to inefficiently low rates, the common pool problem arising from the stacking of decisionmakers taxing a same base gives rise to a phenomenon of over-taxation. Besides, the combination of both externalities yields to an intermediary tax rate : the outcome is brought closer to the social optimum.
Fichier principal
Vignette du fichier
2015_2016_12docWCATT_Horizontal_and_Vertical_Tax_Interactions_FLachetTouya.pdf (250.01 Ko) Télécharger le fichier
Origin Files produced by the author(s)

Dates and versions

hal-02939399 , version 1 (15-09-2020)


  • HAL Id : hal-02939399 , version 1


Florence Lachet-Touya. Horizontal and Vertical Tax Interactions in a Common Agency Game. 2016. ⟨hal-02939399⟩
31 View
56 Download


Gmail Mastodon Facebook X LinkedIn More