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Fiscal Externalities with Imperfect Population Mobility The Three Region Case

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Author Info
Arman Mansoorian (York University, Canada)
Gordon Myers (University of Waterloo, Canada)
Abstract

We consider a federation with three regions and an imperfectly mobile population. If in the Nash equilibrium one region makes transfers to the other two then the outcome is efficient. If in the Nash equilibrium two regions make transfers to a third region the outcome may be inefficient, because each of the transfer making regions ignores the effect of its transfers on migration out of the other rich region, and the resulting benefit to that region. Nevertheless, the Nash equilibrium is efficient when the two transfer making regions are strongly tied together by migration.

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File URL: ftp://dept.econ.yorku.ca/pub/working_papers/96-05.pdf
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File Function: First version, 1996
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Paper provided by York University, Department of Economics in its series Working Papers with number 1996_05.

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Length: 18 pages
Date of creation: May 1996
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Handle: RePEc:yca:wpaper:1996_05

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Related research
Keywords: Federation; Migration; Interregional Transfers; Efficiency.;

Find related papers by JEL classification:
H7 - Public Economics - - State and Local Government; Intergovernmental Relations
R5 - Urban, Rural, and Regional Economics - - Regional Government Analysis

References listed on IDEAS
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  1. Flatters, Frank & Henderson, Vernon & Mieszkowski, Peter, 1974. "Public goods, efficiency, and regional fiscal equalization," Journal of Public Economics, Elsevier, vol. 3(2), pages 99-112, May. [Downloadable!] (restricted)
  2. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October. [Downloadable!] (restricted)
  3. Hercowitz, Zvi & Pines, David, 1991. "Migration with fiscal externalities," Journal of Public Economics, Elsevier, vol. 46(2), pages 163-180, November. [Downloadable!] (restricted)
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  4. Myers, G.M. & Mansoorian, A., 1995. "On the Consequences of Government Objectives for Economies with Mobile Populations," Papers 95-2, York (Canada) - Department of Economics.
    Other versions:
  5. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September. [Downloadable!] (restricted)
  6. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August. [Downloadable!] (restricted)
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