This paper investigates whether OECD countries compete over corporate tax rates to attract investment. It develops two models: one with firm mobility, where countries compete over statutory tax rates and effective average tax rates, and another with capital mobility, where countries compete over effective marginal tax rates. Using data from 21 countries between 1983 and 1999, the authors find evidence that countries compete over all three measures, but particularly over statutory and effective average tax rates. This supports the belief that multinational firms make discrete location choices. The study also finds evidence of concave reaction functions, consistent with the models. The paper highlights the importance of considering both tax rates and tax bases in understanding corporate tax competition. It also notes that while there is evidence of competition over statutory and effective average tax rates, weaker evidence is found for effective marginal tax rates. The study contributes to the literature on tax competition by providing empirical evidence on corporate tax competition and the role of tax bases in determining investment location.This paper investigates whether OECD countries compete over corporate tax rates to attract investment. It develops two models: one with firm mobility, where countries compete over statutory tax rates and effective average tax rates, and another with capital mobility, where countries compete over effective marginal tax rates. Using data from 21 countries between 1983 and 1999, the authors find evidence that countries compete over all three measures, but particularly over statutory and effective average tax rates. This supports the belief that multinational firms make discrete location choices. The study also finds evidence of concave reaction functions, consistent with the models. The paper highlights the importance of considering both tax rates and tax bases in understanding corporate tax competition. It also notes that while there is evidence of competition over statutory and effective average tax rates, weaker evidence is found for effective marginal tax rates. The study contributes to the literature on tax competition by providing empirical evidence on corporate tax competition and the role of tax bases in determining investment location.