Program > Papers by author > Tarola Ornella

This paper studies the interplay between a poor and a rich country when they compete sequentially over corporate taxes and environmental regulations to attract imperfectly mobile firms. Generally, the poor country undercuts the rich country in terms of corporate taxes and chooses to be both a tax and pollution haven when it is less concerned about the environment than the rich country is and capital integration is low. However, it rarely does better in terms of welfare than the rich country. Finally we find that tax competition immunizes countries against the detrimental effect of globalization on environmental standards.