Interjurisdictional competition and the efficiency of the public sector: The triumph of the market over the state?
AbstractIt has been argued in the literature that, interjurisdictional competition forces the public sector to increase its efficiency and thus helps to tame Leviathan governments. The paper addresses this hypothesis by means of a simple taxcompetition model with a Leviathan state. It is seen that the effects of increased factor mobility on the efficiency of the public sector are ambiguous. A calibration of the model shows that a reduction in public-sector efficiency is possible for parameter constellations which are not unrealistic.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 732.
Date of creation: 1996
Date of revision:
Find related papers by JEL classification:
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H40 - Public Economics - - Publicly Provided Goods - - - General
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
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