Tax competition and determination of the quality of public goods
AbstractIn this paper, the authors analyze the behavior of local governments on capital taxation when the financial choices in terms of a public good quality are done by a central planner. More specifically, they ask the question whether a local government has an interest to tax the mobile factor in addition to the tax on representative households or not. The authors show, through a comparison of social welfare given the strategies chosen by the locals governments, that whatever the quality of the public good and its cost is, a local government always has an interest to tax the mobile factor. This leads to a Nash-equilibrium in dominant strategy in their model. --
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2013-31.
Date of creation: 2013
Date of revision:
tax competition; public goods; taxation; quality; welfare;
Find related papers by JEL classification:
- D00 - Microeconomics - - General - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-04 (All new papers)
- NEP-PBE-2013-06-04 (Public Economics)
- NEP-PUB-2013-06-04 (Public Finance)
- NEP-URE-2013-06-04 (Urban & Real Estate Economics)
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