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Do Agglomeration Forces Strengthen Tax Interactions?

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  • Sylvie Charlot

    (INRA Dijon, CESAER UMR 1041, 26 Bld Dr Petitjean, BP 87999, Dijon cedex, 21079, France, charlot@enesad.inra.fr)

  • Sonia Paty

    (CREM and EQUIPPE, University of Caen, 17 rue Claude Bloch, BP 5186, F-14032 Caen Cedex, France, sonia.paty@unicaen.fr)

Abstract

The main purpose of this paper is to assess the existence of tax interdependencies among French local tax setting by taking into account the agglomeration forces. A model of tax setting for the local business tax is estimated using spatial econometrics techniques for 2002. First, it is shown that the mimicking behaviour between jurisdictions is not more intense in denser areas—in population or economic activity terms—suggesting that tax competition is not stronger as agglomeration increases. Secondly, a positive relationship is observed between tax rate and capital stock only for urban jurisdictions, suggesting a ‘taxable agglomeration rent’, as highlighted by new economic geography models.

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Bibliographic Info

Article provided by Urban Studies Journal Limited in its journal Urban Studies.

Volume (Year): 47 (2010)
Issue (Month): 5 (May)
Pages: 1099-1116

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Handle: RePEc:sae:urbstu:v:47:y:2010:i:5:p:1099-1116

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Web page: http://www.gla.ac.uk/departments/urbanstudiesjournal

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References

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Cited by:
  1. Cassette, Aurélie & Di Porto, Edoardo & Foremny, Dirk, 2012. "Strategic fiscal interaction across borders: Evidence from French and German local governments along the Rhine Valley," Journal of Urban Economics, Elsevier, vol. 72(1), pages 17-30.
  2. Sylvie Charlot & Sonia Paty & Virginie Piguet, 2012. "Does fiscal coopération increase local tax rates in urban areas?," Working Papers 1219, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  3. Francisco Delgado & Matías Mayor, 2011. "Tax mimicking among local governments: some evidence from Spanish municipalities," Portuguese Economic Journal, Springer, vol. 10(2), pages 149-164, August.
  4. Michael Devereux & Simon Loretz, 2012. "What do we know about corporate tax competition?," Working Papers, Oxford University Centre for Business Taxation 1229, Oxford University Centre for Business Taxation.

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