This institutional trajectory can be understood in terms of the strategic
structures. The institutional solution to the coordination problem of avoiding
double taxation engenders the asymmetric PD of under-taxation. As
has been shown, actors react to the functional necessities of trying to overcome
the PD by attempting to reform the DTA regime. As the theory
predicts, the efforts at reform are multilateral with the aim of including all or at least most states. This is evidenced by the fact that the OECD actively
engaged in the diffusion of governments’ unilateral anti-avoidance strategies.
It is further evidenced by the OECD project against harmful tax competition.
Also, albeit with limited success, governments try to strengthen
enforcement capabilities, e.g. by pressuring tax havens to exchange information.
But, as expected, the DTA regime was not fully adapted to meet
the challenge of under-taxation; this is for three main reasons.