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Tax competition for commuters

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  • Guo, Ji

Abstract

The paper presents a tax competition model in which local governments can use a wage tax or a land tax to finance public expenditure and compete for commuters. In this model the governments provide public capital goods that are considered a factor of production. Thus, an optimal combination of the two taxes must be chosen, to maximize each jurisdiction's residents' consumption. It is argued that, in symmetric competition, the governments will employ only a land tax. However, in asymmetric competition, the signs of the wage taxes depend on jurisdiction sizes and the specific form of the production function.

Suggested Citation

  • Guo, Ji, 2009. "Tax competition for commuters," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 148-154, March.
    • Handle: RePEc:eee:regeco:v:39:y:2009:i:2:p:148-154
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    References listed on IDEAS

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    1. Braid, Ralph M, 1996. "Symmetric Tax Competition with Multiple Jurisdictions in Each Metropolitan Area," American Economic Review, American Economic Association, vol. 86(5), pages 1279-1290, December.
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    3. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
    4. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, vol. 30(2), pages 167-181, September.
    5. Bucovetsky, S., 2005. "Public input competition," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1763-1787, September.
    6. George R. Zodrow & Peter Mieszkowski, 2019. "Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 17, pages 525-542, World Scientific Publishing Co. Pte. Ltd..
    7. Braid, Ralph M., 2005. "Tax competition, tax exporting and higher-government choice of tax instruments for local governments," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1789-1821, September.
    8. Wilson John Douglas, 1995. "Mobile Labor, Multiple Tax Instruments, and Tax Competition," Journal of Urban Economics, Elsevier, vol. 38(3), pages 333-356, November.
    9. Anwar, Sajid, 2001. "Government spending on public infrastructure, prices, production and international trade," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 19-31.
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    Cited by:

    1. Braid, Ralph M., 2009. "The employment effects of a central city's source-based wage tax or hybrid wage tax," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 512-521, July.
    2. Woohyung Lee & Byeongho Choe, 2012. "Agglomeration effect and tax competition in the metropolitan area," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 789-803, December.

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