Many authors demonstrate that the tax gap resulting from tax competition increases

with the size asymmetry of the competing countries. Consequently, increasing

country-size disparities exacerbates the inefficiency of tax competition.

The aim of this note is to show that this classical view has no general validity if

we consider that countries compete not only in taxes but also in the provision of

infrastructure. The simple model we develop for this purpose demonstrates that

the effect of size disparity on efficiency depends crucially on the degree of international

capital mobility.