Change search
ReferencesLink to record
Permanent link

Direct link
Keeping up with the Joneses, the Smiths and the Tanakas: on international tax coordination and social comparisons
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
2015 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 131, 71-86 p.Article in journal (Refereed) Published
Abstract [en]

Recent evidence suggests that social comparisons between people in different countries have become more important over time due to globalization. This paper deals with optimal nonlinear income taxation in an international setting, where consumers derive utility from their relative consumption compared both with other domestic residents and people in another country. The optimal tax policy in our framework reflects both correction for positional externalities and redistributive aspects of such correction due to the incentive constraint facing each government. If the national governments behave as Nash competitors to each other, the resulting tax policy only internalizes the externalities that are due to within-country comparisons, whereas the tax policy chosen by the leader country in a Stackelberg game also to some extent reflects between-country comparisons. We also derive globally Pareto-efficient tax policies in a cooperative framework, and conclude that there are potentially large welfare gains of international tax policy coordination.

Place, publisher, year, edition, pages
Elsevier, 2015. Vol. 131, 71-86 p.
Keyword [en]
Optimal taxation, Relative consumption, Inter-jurisdictional comparison, Asymmetric information, Status, Positional goods
National Category
Research subject
URN: urn:nbn:se:umu:diva-107701DOI: 10.1016/j.jpubeco.2015.08.004ISI: 000365056600007OAI: diva2:849064
Riksbankens Jubileumsfond, RS10-1319:1
Available from: 2015-08-27 Created: 2015-08-27 Last updated: 2015-12-11Bibliographically approved

Open Access in DiVA

fulltext(973 kB)43 downloads
File information
File name FULLTEXT01.pdfFile size 973 kBChecksum SHA-512
Type fulltextMimetype application/pdf

Other links

Publisher's full text

Search in DiVA

By author/editor
Aronsson, Thomas
By organisation
In the same journal
Journal of Public Economics

Search outside of DiVA

GoogleGoogle Scholar
Total: 43 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Altmetric score

Total: 226 hits
ReferencesLink to record
Permanent link

Direct link