We study how harmonization of corporate tax systems affects the stability of international cartels. We show that tax base harmonization reinforces collusive agreements, while harmonization of corporate tax rates may destabilize or stabilize cartels. We also find that bilateral and full harmonization to a common standard is worse from society’s point of view than unilateral harmonization to a minimum tax standard.

Corporate tax systems, tacit collusion
International Fiscal Issues; International Public Goods (jel H87), Market Structure, Firm Strategy, and Market Performance (jel L1)
Journal of Public Economic Theory
Erasmus School of Economics

Schindler, D.S., & Schjelderup, G. (2009). Harmonization of Corporate Tax Systems and Its Effect on Collusive Behavior. Journal of Public Economic Theory, 11(4), 599–621. Retrieved from http://hdl.handle.net/1765/124531