This paper examines whether OECD countries compete with each other over corporate taxes to attract investment. The authors develop two models: one where firms are mobile and countries compete over statutory tax rates or effective average tax rates, and another where firms are immobile and countries compete over effective marginal tax rates. Using data from 21 countries between 1983 and 1999, they estimate the parameters of reaction functions and find evidence that countries compete over all three measures, particularly over the statutory tax rate and the effective average tax rate. This supports the belief that multinational firms make discrete location choices between locations based on tax rates. The study also finds evidence of concave reaction functions, indicating that countries with higher tax rates tend to respond more strongly to changes in tax rates in other countries. The empirical analysis is based on detailed measures of corporate taxes, which is a novel contribution to the literature on tax competition.This paper examines whether OECD countries compete with each other over corporate taxes to attract investment. The authors develop two models: one where firms are mobile and countries compete over statutory tax rates or effective average tax rates, and another where firms are immobile and countries compete over effective marginal tax rates. Using data from 21 countries between 1983 and 1999, they estimate the parameters of reaction functions and find evidence that countries compete over all three measures, particularly over the statutory tax rate and the effective average tax rate. This supports the belief that multinational firms make discrete location choices between locations based on tax rates. The study also finds evidence of concave reaction functions, indicating that countries with higher tax rates tend to respond more strongly to changes in tax rates in other countries. The empirical analysis is based on detailed measures of corporate taxes, which is a novel contribution to the literature on tax competition.