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Footloose Entrepreneurs, Taxes and Subsidies

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  • Pasquale Commendatore
  • Martin Currie
  • Ingrid Kubin

Abstract

Abstract 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’.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Economics, The University of Manchester in its series The School of Economics Discussion Paper Series with number 0521.

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Date of creation: 2005
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Handle: RePEc:man:sespap:0521

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Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/
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Cited by:
  1. Pasquale Commendatore & Ingrid Kubin & Carmelo Petraglia, 2008. "Productive Public Expenditure in a New Economic Geography Model," Economie Internationale, CEPII research center, issue 114, pages 133-160.
  2. Kuechle, Graciela, 2014. "Regional concentration of entrepreneurial activities," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 59-73.
  3. Anna Agliari & Pasquale Commendatore & Ilaria Foroni & Ingrid Kubin, 2014. "Expectations and industry location: a discrete time dynamical analysis," Decisions in Economics and Finance, Springer, vol. 37(1), pages 3-26, April.
  4. L. Garrido-da-Silva & Sofia B.S.D. Castro & Paulo B. Vasconcelos, 2014. "Discrete dynamics for the core-periphery model," FEP Working Papers 528, Universidade do Porto, Faculdade de Economia do Porto.
  5. Commendatore, Pasquale & Michetti, Elisabetta & Purificato, Francesco, 2013. "Financial Development and Agglomeration," MPRA Paper 48425, University Library of Munich, Germany.

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