Antiagglomeration Subsidies With Heterogeneous Firms
AbstractThis paper studies anti-agglomeration subsidies in a core-periphery setting when firms are heterogeneous in labour productivity, focusing on the effects of a relocation subsidy on firm location in various tax-financing schemes (local versus global). We discuss how a subsidy can enhance welfare and average productivity in the periphery. As a result we find that a subsidy proportional to profits can induce the relocation of high productivity firms and thus increase welfare and average productivity in the periphery. Concerning tax-financing schemes, a local tax financing scheme has an optimal level of subsidy.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Regional Science.
Volume (Year): 52 (2012)
Issue (Month): 2 (05)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146
Other versions of this item:
- Toshihiro Okubo, 2011. "Anti-agglomeration Subsidies with Heterogeneous Firms," Discussion Paper Series DP2011-11, Research Institute for Economics & Business Administration, Kobe University.
- Toshihiro Okubo, 2011. "Anti-agglomeration Subsidies with Heterogeneous Firms," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-012, Keio/Kyoto Joint Global COE Program.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
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