Intra-Jurisdictional Tax Competition

While much has been written about inter-jurisdictional competition for tax revenues, especially concerning the choice between harmonization and competition, the literature has largely ignored intrajurisdiction issues. The few articles examining this issue focus on how lower level governmental entities react to the tax decisions of a national government. However, in some instances, multiple co-equal taxing authorities might share the same base. These bodies face a dilemma over whether to harmonize their policies or to compete. We present a simple model of revenue maximizing tax authorities and derive the conditions under which harmonization dominates competition. JEL classification: H20, H77