The authors examine a two-country general-equilibrium model of a two-country trading block where governments through tax policies attract mobile capital and provide an imported public consumption good. Within this framework the authors examine, among other things, how preferences over the public...

This paper examines the optimal capital tax policy under quantitative import constraints, and international capital tax credits. for a small capital-importing country, the optimal capital tax equals the foreign tax under a quota, and equals or exceeds the foreign tax under a VER. For a small...