What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

Question

Quizplus · Accepted Answer

Countries often engage in a "race to the bottom" by lowering their corporate tax rates in order to attract foreign investment and remain competitive with other countries. When one country lowers their tax rate, others may feel compelled to follow suit in order to maintain their competitiveness. This can lead to a spiraling effect where tax rates continue to decrease in many countries.

What Explains the "Follow-The-Leader" Effect of Countries Changing Their Corporate