IDEAS home Printed from https://ideas.repec.org/a/hit/hitjec/v54y2013i2p177-201.html
   My bibliography  Save this article

Agglomeration, Tax, And Local Public Goods

Author

Listed:
  • WANG, AN-MING
  • ZENG, DAO-ZHI

Abstract

In this paper, we explore the interaction between taxation and a local public good (LPG) to see how it impacts the spatial pattern in the framework of new economic geography (NEG). In the benchmark case of a pure LPG, the system displays a similar location pattern to the existing NEG taxation model, although the tax reduces the market size of manufactured goods. However, when we consider the inherent congestion of an LPG, we find a new agglomeration force due to the demand of the LPG and a new dispersion force due to its congestion.As a result of their interaction, the congestability is crucial in determining the spatial location pattern.

Suggested Citation

  • Wang, An-Ming & Zeng, Dao-Zhi, 2013. "Agglomeration, Tax, And Local Public Goods," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(2), pages 177-201, December.
  • Handle: RePEc:hit:hitjec:v:54:y:2013:i:2:p:177-201
    DOI: 10.15057/26017
    as

    Download full text from publisher

    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/26017/HJeco0540201770.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.15057/26017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
    2. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    4. Turnovsky, Stephen J., 1996. "Optimal tax, debt, and expenditure policies in a growing economy," Journal of Public Economics, Elsevier, vol. 60(1), pages 21-44, April.
    5. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 645-661.
    6. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    7. Haufler, Andreas & Wooton, Ian, 2010. "Competition for firms in an oligopolistic industry: The impact of economic integration," Journal of International Economics, Elsevier, vol. 80(2), pages 239-248, March.
    8. Kind, Hans Jarle & Knarvik, Karen Helene Midelfart & Schjelderup, Guttorm, 2000. "Competing for capital in a 'lumpy' world," Journal of Public Economics, Elsevier, vol. 78(3), pages 253-274, November.
    9. Edwards, John H. Y., 1990. "Congestion function specification and the "publicness" of local public goods," Journal of Urban Economics, Elsevier, vol. 27(1), pages 80-96, January.
    10. Conley, John P. & Wooders, Myrna H., 2001. "Tiebout Economies with Differential Genetic Types and Endogenously Chosen Crowding Characteristics," Journal of Economic Theory, Elsevier, vol. 98(2), pages 261-294, June.
    11. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    12. Ihara, Ryusuke, 2008. "Transport costs, capital mobility and the provision of local public goods," Regional Science and Urban Economics, Elsevier, vol. 38(1), pages 70-80, January.
    13. Hochman, Oded, 1982. "Congestable local public goods in an urban setting," Journal of Urban Economics, Elsevier, vol. 11(3), pages 290-310, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian Langer, 2019. "Expenditure interactions between municipalities and the role of agglomeration forces: a spatial analysis for North Rhine-Westphalia," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(3), pages 497-527, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kato, Hayato, 2015. "The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy," European Economic Review, Elsevier, vol. 74(C), pages 57-78.
    2. Gallo, Fredrik, 2010. "Resisting economic integration when industry location is uncertain," European Economic Review, Elsevier, vol. 54(3), pages 467-482, April.
    3. Fabien Candau, 2008. "Entrepreneurs' Location Choice And Public Policies: A Survey Of The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 909-952, December.
    4. Fabien Candau, 2008. "Urban costs, Trade costs and Tax Competition," Revue d'économie politique, Dalloz, vol. 118(5), pages 625-661.
    5. Borck, Rainald & Pfluger, Michael, 2006. "Agglomeration and tax competition," European Economic Review, Elsevier, vol. 50(3), pages 647-668, April.
    6. Kristian Behrens & Frédéric Robert‐Nicoud, 2009. "Krugman's Papers in Regional Science: The 100 dollar bill on the sidewalk is gone and the 2008 Nobel Prize well‐deserved," Papers in Regional Science, Wiley Blackwell, vol. 88(2), pages 467-489, June.
    7. Meurers, Martin & Moenius, Johannes, 2018. "Optimal Public Investment in Economic Centers and the Periphery," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181579, Verein für Socialpolitik / German Economic Association.
    8. John Feddersen, 2012. "Why we can't confirm the pollution haven hypothesis: A model of carbon leakage with agglomeration," Economics Series Working Papers 613, University of Oxford, Department of Economics.
    9. Sandy Fréret & Denis Maguain, 2017. "The effects of agglomeration on tax competition: evidence from a two-regime spatial panel model on French data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 1100-1140, December.
    10. An-Ming Wang, 2016. "Agglomeration and simplified housing boom," Urban Studies, Urban Studies Journal Limited, vol. 53(5), pages 936-956, April.
    11. Toshihiro Atsumi, 2017. "Agglomeration under money illusion," Economics Bulletin, AccessEcon, vol. 37(4), pages 2962-2969.
    12. Karen Crabbé & Karolien De Bruyne, 2013. "Taxes, Agglomeration Rents and Location Decisions of Firms," De Economist, Springer, vol. 161(4), pages 421-446, December.
    13. Pierre Philippe Combes & Gilles Duranton & Henry G. Overman, 2005. "Agglomeration and the adjustment of the spatial economy§," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 311-349, August.
    14. Baldwin, Richard E. & Krugman, Paul, 2004. "Agglomeration, integration and tax harmonisation," European Economic Review, Elsevier, vol. 48(1), pages 1-23, February.
    15. Pierre M. Picard & Dao‐Zhi Zeng, 2010. "A Harmonization Of First And Second Natures," Journal of Regional Science, Wiley Blackwell, vol. 50(5), pages 973-994, December.
    16. Ugo Fratesi & Massimiliano Riggi, 2004. "Migration and Regional Disparities: the Role of Skill Biased Flows," Urban/Regional 0407004, University Library of Munich, Germany.
    17. Ikeda, Kiyohiro & Onda, Mikihisa & Takayama, Yuki, 2018. "Spatial period doubling, invariant pattern, and break point in economic agglomeration in two dimensions," Journal of Economic Dynamics and Control, Elsevier, vol. 92(C), pages 129-152.
    18. Federico Trionfetti, 2015. "Public Debt and Economic Geography," International Regional Science Review, , vol. 38(1), pages 92-113, January.
    19. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 681-703, September.
    20. José Gaspar & Sofia Balbina Santos Dias de Castro & João Correia da Silva, 2013. "The Footloose Entrepreneur Model with 3 Regions," FEP Working Papers 496, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item

    Keywords

    tax; agglomeration; dispersion; congestible local public good;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hit:hitjec:v:54:y:2013:i:2:p:177-201. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Digital Resources Section, Hitotsubashi University Library (email available below). General contact details of provider: https://edirc.repec.org/data/fehitjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.