Footloose Entrepreneurs, Taxes and Subsidies
AbstractAbstract This paper challenges the robustness of policy propositions of the New Economic Geography. Simply altering the temporal framework of the Footloose Entrepreneur model implies that the system can exhibit periodic cycles, chaotic orbits or agglomeration. Minute changes in a tax or subsidy rate can have dramatic, unpredictable and/or irreversible repercussions on the spatial location of manufacturing industry and on social welfare. The complexity of the dynamics is likely to be exacerbated by competition between governments employing subsidies to attract or retain entrepreneurs. The possibility of complex dynamical behaviour is not eliminated by assuming that entrepreneurs are ‘rational’.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Spatial Economic Analysis.
Volume (Year): 3 (2008)
Issue (Month): 1 ()
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Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=113393
Other versions of this item:
- F20 - International Economics - - International Factor Movements and International Business - - - General
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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