A note on tax competition in the presence of agglomeration economies
This paper analyzes tax competition in the presence of agglomeration effects. The obtained results are then compared to the results of the traditional model, without agglomeration effects. In the model with agglomeration effects a new effect shows up. This effect reflects heightened government conce...
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| Autor principal: | |
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| Formato: | Objeto de conferencia |
| Lenguaje: | Inglés |
| Publicado: |
2004
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| Materias: | |
| Acceso en línea: | http://sedici.unlp.edu.ar/handle/10915/170019 |
| Aporte de: |
| Sumario: | This paper analyzes tax competition in the presence of agglomeration effects. The obtained results are then compared to the results of the traditional model, without agglomeration effects. In the model with agglomeration effects a new effect shows up. This effect reflects heightened government concern about capital flight, which depresses firm productivity by limiting external economies of scale. As a result, capital tax rates end up being lower than in the case where agglomeration effects are not present, worsening the underprovision of the public good. This conclusion holds in both the competitive and strategic versions of the model. |
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