J. E. Anderson and E. Van-wincoop, Gravity with Gravitas: A Solution to the Border Puzzle, American Economic Review, vol.93, issue.1, pp.170-192, 2003.
DOI : 10.1257/000282803321455214

S. L. Baier and J. H. Bergstrand, Do free trade agreements actually increase members' international trade?, Journal of International Economics, vol.71, issue.1, pp.72-95, 2007.
DOI : 10.1016/j.jinteco.2006.02.005
URL : http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.498.6334

R. E. Baldwin and P. Krugman, Agglomeration, integration and tax harmonisation, European Economic Review, vol.48, issue.1, pp.1-23, 2004.
DOI : 10.1016/S0014-2921(02)00318-5

K. Behrens, A. R. Lamorgese, G. I. Ottaviano, and T. Tabuchi, Beyond the home market effect: Market size and specialization in a multi-country world, Journal of International Economics, vol.79, issue.2, pp.259-265, 2009.
DOI : 10.1016/j.jinteco.2009.08.005

A. Bénassy-quéré, L. Fontagné, and A. Lahrèche, How Does FDI React to Corporate Taxation?, International Tax and Public Finance, vol.51, issue.2, pp.583-603, 2005.
DOI : 10.1007/s10797-005-2652-4

T. Besley, R. Griffith, and A. Klemm, Fiscal reaction functions, 2001.

M. Brülhart, M. Jametti, and K. Schmidheiny, Do agglomeration economies reduce the sensitivity of firm location to tax differentials?*, The Economic Journal, vol.52, issue.2, 2009.
DOI : 10.1111/j.1468-0297.2012.02511.x

S. Bucovetsky, Asymmetric tax competition, Journal of Urban Economics, vol.30, issue.2, pp.167-181, 1991.
DOI : 10.1016/0094-1190(91)90034-5

A. Charlton, Incentive Bidding for Mobile Investment: Economic Consequences and Potential Responses, OECD Development Centre Working Paper, p.203, 2003.
DOI : 10.1787/864178271805

K. Crabbé and H. Vandenbussche, Are your firm's taxes set in Warsaw? Spatial tax competition in Europe, LICOS Discussion Paper, p.21608, 2008.

M. Crozet and F. Trionfetti, Trade costs and the Home Market Effect, Journal of International Economics, vol.76, issue.2, pp.309-321, 2008.
DOI : 10.1016/j.jinteco.2008.07.006
URL : https://hal.archives-ouvertes.fr/hal-00497693

R. B. Davies and J. Voget, Tax competition in an expanding European Union. Working Paper 08, 2008.

D. R. Davis and D. E. Weinstein, Market access, economic geography and comparative advantage: an empirical test, Journal of International Economics, vol.59, issue.1, pp.1-23, 2003.
DOI : 10.1016/S0022-1996(02)00088-0

M. P. Devereux, R. Griffith, and A. Klemm, Corporate income tax: reforms and tax competition. Economic Policy, pp.451-495, 2002.

M. P. Devereux, B. Lockwood, and M. Redoano, Do countries compete over corporate tax rates?, Journal of Public Economics, vol.92, issue.5-6, pp.1210-1235, 2008.
DOI : 10.1016/j.jpubeco.2007.09.005

A. K. Dixit and J. E. Stiglitz, Monopolistic competition and optimum product diversity, American Economic Review, vol.67, issue.3, pp.297-308, 1977.

J. Eaton and S. Kortum, Technology, Geography, and Trade, Econometrica, vol.70, issue.5, pp.1741-1779, 2002.
DOI : 10.1111/1468-0262.00352

N. Exbrayat, Does Trade Liberalization Trigger Tax Competition? Theory and Evidence from OECD Countries, SSRN Electronic Journal, 2011.
DOI : 10.2139/ssrn.2792102
URL : https://hal.archives-ouvertes.fr/halshs-01328769

N. Exbrayat, C. Gaigné, and S. Riou, How labor market rigidities shape business taxation in a global economy? GATE Working Paper No, 1028.

R. Feenstra, Advanced International Trade, 2003.

C. Gaigné and S. Riou, Globalization, Asymmetric Tax Competition, and Fiscal Equalization, Journal of Public Economic Theory, vol.10, issue.6, pp.901-925, 2007.
DOI : 10.1016/0166-0462(91)90066-V

G. Gilbert, A. Lahrèche-révil, T. Madiès, and T. Mayer, Conséquences Internationales et Locales sur L'imposition Des Entreprises, Croissance équitable et concurrence fiscale, pp.187-225, 2005.

A. Haufler and F. Mittermaier, Unionisation Triggers Tax Incentives to Attract Foreign Direct Investment*, The Economic Journal, vol.107, issue.553, 2011.
DOI : 10.1111/j.1468-0297.2010.02405.x
URL : http://www.bgpe.de/texte/DP/052_haufler_mittermaier.pdf

A. Haufler and I. Wooton, Competition for firms in an oligopolistic industry: The impact of economic integration, Journal of International Economics, vol.80, issue.2, pp.239-248, 2010.
DOI : 10.1016/j.jinteco.2009.10.002

K. Head and T. Mayer, Regional wage and employment responses to market potential in the EU, Regional Science and Urban Economics, vol.36, issue.5, pp.573-594, 2006.
DOI : 10.1016/j.regsciurbeco.2006.06.002
URL : https://hal.archives-ouvertes.fr/halshs-00754132

K. Head and T. Mayer, Gravity, market potential and economic development, Journal of Economic Geography, vol.11, issue.2, pp.281-294, 2011.
DOI : 10.1093/jeg/lbq037
URL : https://hal.archives-ouvertes.fr/hal-01024204

P. Kammas, Strategic fiscal interaction among OECD countries, Public Choice, vol.19, issue.3-4, pp.459-480, 2011.
DOI : 10.1007/s11127-010-9641-6

H. Kind, K. M. Knarvik, and G. Schjelderup, Competing for capital in a ???lumpy??? world, Journal of Public Economics, vol.78, issue.3, pp.253-274, 2000.
DOI : 10.1016/S0047-2727(99)00119-X

S. Loretz, Corporate taxation in the OECD in a wider context, Oxford Review of Economic Policy, vol.24, issue.4, pp.639-660, 2008.
DOI : 10.1093/oxrep/grn035

R. Ludema and I. Wooton, Economic geography and the fiscal effects of regional integration, Journal of International Economics, vol.52, issue.2, pp.331-357, 2000.
DOI : 10.1016/S0022-1996(99)00050-1

N. Marceau, S. Mongrain, and J. D. Wilson, Why Do Most Countries Set High Tax Rates on Capital?, SSRN Electronic Journal, vol.80, issue.2, pp.249-259, 2010.
DOI : 10.2139/ssrn.985541
URL : http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.604.1706

M. J. Melitz and G. Ottaviano, Market Size, Trade, and Productivity, Review of Economic Studies, vol.75, issue.1, pp.295-316, 2008.
DOI : 10.1111/j.1467-937X.2007.00463.x
URL : http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.598.7863

S. Nickell, Biases in Dynamic Models with Fixed Effects, Econometrica, vol.49, issue.6, pp.1417-1426, 1981.
DOI : 10.2307/1911408

G. Ottaviano and T. Van-ypersele, Market size and tax competition, Journal of International Economics, vol.67, issue.1, pp.25-46, 2005.
DOI : 10.1016/j.jinteco.2004.08.010

A. Pagan, Econometric Issues in the Analysis of Regressions with Generated Regressors, International Economic Review, vol.25, issue.1, pp.221-247, 1984.
DOI : 10.2307/2648877

P. Pieretti and S. Zanaj, On tax competition, public goods provision and jurisdictions' size, Journal of International Economics, vol.84, issue.1, pp.124-130, 2011.
DOI : 10.1016/j.jinteco.2011.01.005

S. Redding and A. Venables, Economic geography and international inequality, Journal of International Economics, vol.62, issue.1, pp.53-82, 2004.
DOI : 10.1016/j.jinteco.2003.07.001

J. Rose and E. Van-wincoop, National Money as a Barrier to International Trade: The Real Case for Currency Union, American Economic Review, vol.91, issue.2, pp.386-390, 2001.
DOI : 10.1257/aer.91.2.386

J. D. Wilson, Tax competition with interregional differences in factor endowments, Regional Science and Urban Economics, vol.21, issue.3, pp.423-452, 1991.
DOI : 10.1016/0166-0462(91)90066-V

J. D. Wilson, Tax Competition with and without Preferential Treatment of a Highly- Mobile Tax Base The Challenge of Tax Reform in a Global Economy, pp.193-206, 2005.

J. M. Wooldridge, Cluster-Sample Methods in Applied Econometrics, American Economic Review, vol.93, issue.2, pp.133-138, 2003.
DOI : 10.1257/000282803321946930

B. Appendix, Data sources and summary statistics EATR it : Effective Average Tax Rate (source: Devereux et al, 2002.

. Ijt, Trade integration index (own calculations using Trade and Production and Gravity databases of CEPII)

R. It, Real market potential (source: CEPII) FRmp it : Foreign real market potential DRmp it : Domestic real market potential PCONS it : public consumption in percentage of GDP per capita (source

. Note, RealGDPGap in million PopGap in billion; RmpGap, FRmpGap and DrmpGap in trillion (to make coefficient estimates more readable in Tables 1 through 6)