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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anke S. Kessler & Christoph Luelfesmann & Gordon M. Myers, 2007. "Federations, Constitutions, and Political Bargaining," Discussion Papers dp07-19, Department of Economics, Simon Fraser University.
- Michael Smart, 2007.
"Raising taxes through equalization,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 40(4), pages 1188-1212, November.
- Kevin Milligan & Michael Smart, 2005. "Regional Grants as Pork Barrel Politics," CESifo Working Paper Series 1453, CESifo Group Munich.
- Ross Hickey, 2013. "Bicameral bargaining and federation formation," Public Choice, Springer, vol. 154(3), pages 217-241, March.
- Sam Bucovetsky & Michael Smart, 2002.
"The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions,"
CESifo Working Paper Series
767, CESifo Group Munich.
- Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, 01.
- DePeter James A. & Myers Gordon M., 1994. "Strategic Capital Tax Competition: A Pecuniary Externality and a Corrective Device," Journal of Urban Economics, Elsevier, vol. 36(1), pages 66-78, July.
- WILDASIN, David E., .
"Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy,"
CORE Discussion Papers RP
-831, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
- Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
- Sotiris Karkalakos & Christos Kotsogiannis, 2007. "A spatial analysis of provincial corporate income tax responses: evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 782-811, August.
- Caputo, Michael R., 1996. "The Envelope Theorem and Comparative Statics of Nash Equilibria," Games and Economic Behavior, Elsevier, vol. 13(2), pages 201-224, April.
- Bev Dahlby & Neil Warren, 2003. "Fiscal Incentive Effects of the Australian Equalisation System," The Economic Record, The Economic Society of Australia, vol. 79(247), pages 434-445, December.
- Johnson, William R, 1988. "Income Redistribution in a Federal System," American Economic Review, American Economic Association, vol. 78(3), pages 570-73, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.