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Locational efficiency in a federal system without land rent taxation

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  • Robert Philipowski

    (Universität Bonn)

Abstract

We show that in a federal state with mobile population labor and capital income taxes do not suffice to achieve efficiency in general, but that they do suffice if the federation consists of just two types of regions. In the general case we study the resulting second-best problem and find that in the second-best optimum the level of public good provision is efficient, but neither capital nor labor is allocated efficiently.

Suggested Citation

  • Robert Philipowski, 2017. "Locational efficiency in a federal system without land rent taxation," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 37(1), pages 91-102, February.
    • Handle: RePEc:spr:jahrfr:v:37:y:2017:i:1:d:10.1007_s10037-016-0109-0
    DOI: 10.1007/s10037-016-0109-0
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    References listed on IDEAS

    as
    1. Wildasin, David E., 1980. "Locational efficiency in a federal system," Regional Science and Urban Economics, Elsevier, vol. 10(4), pages 453-471, November.
    2. Wellisch,Dietmar, 2000. "Theory of Public Finance in a Federal State," Cambridge Books, Cambridge University Press, number 9780521630351.
    3. Dietmar Wellisch & Jorg Hülshorst, 2000. "A Second-Best Theory of Local Government Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(1), pages 5-22, February.
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    More about this item

    Keywords

    Federalism; Mobile population; Locational efficiency;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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