Tax competition and equalization: the impact of voluntary cooperation on the efficiency goal
AbstractLiterature has long learned about the welfare improving effect of equalization in tax competition environments. By setting incentives to local authorities, public spending becomes efficient in spite of relying on a mobile resource as the tax base. This paper proves that this result cannot hold when local players have influence on the shape of the transfer system. A bargaining concerning equalization may change the incentives arising from equalization.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/16.
Length: 39 pages
Date of creation: 2009
Date of revision:
tax competition; fiscal equalization; nash bargaining; cooperation;
Find related papers by JEL classification:
- H10 - Public Economics - - Structure and Scope of Government - - - General
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-MIC-2009-11-14 (Microeconomics)
- NEP-PBE-2009-11-14 (Public Economics)
- NEP-PUB-2009-11-14 (Public Finance)
- NEP-URE-2009-11-14 (Urban & Real Estate Economics)
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