Does equalization transfer enhance partial tax cooperation?

This paper analyzes the effect of equalization transfer scheme on partial tax cooperation condition in a repeated game setting. It is shown that in order to achieve partial tax cooperation between two capital-rich (exporting) countries, the full equalization transfer scheme is superior to the partial equalization transfer scheme, whereas in order to achieve partial tax cooperation between two capital-poor (importing) countries, the partial equalization transfer scheme is superior to the full equalization transfer scheme.