Interregional Tax Competition and Intraregional Political Competition: The Optimal Provision of Public Goods
AbstractThis paper explores the implications of the interaction between interregional tax competition and intraregional political competition for the optimal provision of public goods. In contrast to Hoyt's (1991) finding that the extent to which public goods are undersupplied is monotonically increasing in the number of competing regions, we show that the relationship between the level of public good supply and the number of competing regions is nonmonotonic if political as well as tax competition is considered. Interestingly, some certain interaction between interregional tax competition and intraregional political competition can result in the optimal provision of public goods.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-553.
Length: 24 pages
Date of creation: Apr 2008
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-21 (All new papers)
- NEP-PBE-2008-04-21 (Public Economics)
- NEP-POL-2008-04-21 (Positive Political Economics)
- NEP-URE-2008-04-21 (Urban & Real Estate Economics)
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