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Interjurisdictional Competition and Public-Sector Prodigality: The Triumph of the Market over the State?

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Author Info
Michael Rauscher

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Abstract

It has been argued in the literature that interjurisdictional competition forces the public sector to increase its efficiency and thus helps to tame Leviathan governments. The paper addresses this hypothesis by means of a simple tax-competition model with a Leviathan state. It is seen that the effects that increased factor mobility has on the wastefulness of the public sector are ambiguous. A calibration of the model shows that the share of public funds wasted by the public sector may increase for parameter constellations which are not unrealistic.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 57 (2000)
Issue (Month): 1 (September)
Pages: 89-
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200009)57:1_89:icappt_2.0.tx_2-5

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Web page: http://www.mohr.de/fa

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Find related papers by JEL classification:
F20 - International Economics - - International Factor Movements and International Business - - - General
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H40 - Public Economics - - Publicly Provided Goods - - - General
H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

Cited by:
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  1. Michael Rauscher, 2005. "Tax Competition, Capital Mobility, and Innovation in the Public Sector," Thuenen-Series of Applied Economic Theory 54, University of Rostock, Institute of Economics, Germany. [Downloadable!]
    Other versions:
  2. Daniel Becker, 2005. "Dynamic Tax Competition and Public-Sector Modernisation," Thuenen-Series of Applied Economic Theory 56, University of Rostock, Institute of Economics, Germany. [Downloadable!]
  3. Kangsik, Choi, 2009. "Endogenous Timing with Government's Preference and Privatization," MPRA Paper 13844, University Library of Munich, Germany. [Downloadable!]
  4. Wolfgang Eggert & Peter Birch Sørensen, 2007. "The Effects of Tax Competition when Politicians Create Rents to Buy Political Support," EPRU Working Paper Series 07-04, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  5. Rauscher, Michael, 2004. "Economic Growth and Tax-Competing Leviathans," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  6. Wolfram Richter, 2002. "Delaying Integration of Immigrant Labor for the Purpose of Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  7. Kangsik, Choi, 2009. "Privatization, Government's Preference and Unionization Structure: A Mixed Oligopoly Approach," MPRA Paper 13028, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-12-1.


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