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AbstractThis paper aims to show that fairness in trade calls for relaxing existing WTO rules to include a greater liberalisation of labour migration. After having addressed several objections to global egalitarianism, it will argue, first, that the world's rich and the world's poor participate in a same multilateral trading system whose point is primarily to reduce trade barriers, and hence to establish global economic competitions, in order to raise their standards of living; second, that these competitions are subject to requirements of formal and substantive fairness; and, third, that the substantive fairness of the competitions that are taking place in the field of trade in goods is likely to require a greater liberalisation of labour migration, especially low-skilled labour from developing countries.

Multinational companies can shift profit and income between branches in order to reduce the overall tax liabilities of the company. The result is a tax competition between countries. In this paper we consider the sequential choice of tax rates to illustrate the potential effects of tax leadership. We use a profit shifting model with multinational firms that operate in two countries, large and small. Governments compete by setting source-based corporate income taxes. We show that: (i) the sequential tax equilibria always Pareto dominate the simultaneous tax equilibrium. (ii) Each country prefers to follow than to lead the tax game. (iii) The tax leadership by the large country risk-dominates the tax leadership by the small country. Therefore our analysis provides a plausible explanation for the endogenous emergence of the tax leader- ship by the large countries. The results are contrasting with previous results in the literature.