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Yardstick Competition among Portuguese Municipalities: The Case of Urban Property Tax (IMI)

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  • José da Silva Costa

    ()
    (Faculdade de Economia, Universidade do Porto.)

  • Armindo Cravalho

    ()
    (Faculdade de Economia, Universidade do Porto.)

Abstract

In this paper we gather empirical evidence on the existence of strategic interaction among Portuguese municipal executives when they set rates of property tax and in particular if we are in the presence of yardstick competition. For that purpose, we adopted the assumption of geographic interaction among Portuguese municipalities when setting rates of property tax. We have estimated, for evaluated and non-evaluated urban property, spatial lag models with two spatial dependency regimes (municipalities with and without a solid majority) and cross-section fixed effects coefficients. The results provide strong empirical evidence on the existence of strategic interaction among Portuguese municipalities when setting rates of municipal taxes and on the yardstick hypothesis.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 495.

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Length: 24 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:por:fepwps:495

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Keywords: Yarstick competition; Local Governments; Portugal.;

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Cited by:
  1. Hugo Miguel de Oliveira Cruz Pinto de Abreu & Elísio Fernando Moreira Brandão & Samuel Cruz Alves Pereira, 2014. "Crossing Mountains: The Effect of Competition on the Laffer Curve," FEP Working Papers 523, Universidade do Porto, Faculdade de Economia do Porto.

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