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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Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 57 (2000) Issue (Month): 1 (September) Pages: 89- Download reference. The following formats are available: HTML
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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
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