Comparison of Nash and evolutionary stable equilibrium in asymmetric tax competition

We show that under suitable assumptions the evolutionary stable tax rate in asymmetric tax competition is strictly lower than all tax rates obtained in Nash equilibrium, generalizing in this way a recent result by Sano (Evolutionary and Institutional Economics Review 9 (2012), S1–S23) and Wagener (International Economic Review 54 (2013), 1251–1264) obtained in the context of symmetric tax competition. Our assumptions are satisfied in several models of capital and commodity tax competition.