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Efficient Tax Exporting

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  • Russell Krelove

Abstract

In a multijurisdiction economy with free mobility of households between communities, some portion of any community's tax is incident upon nonresident landowners. It is shown that when the objective of a community is taken to be the level of satisfaction of its residents, a fully efficient allocation is a (Nash) equilibrium of the decentralized game. In general, no local tax structure that restricts a community's tax base to residents can attain the optimum; thus, tax exporting is necessary for independent local government behavior to be consistent with efficiency.

Suggested Citation

  • Russell Krelove, 1992. "Efficient Tax Exporting," Canadian Journal of Economics, Canadian Economics Association, vol. 25(1), pages 145-155, February.
  • Handle: RePEc:cje:issued:v:25:y:1992:i:1:p:145-55
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    1. repec:kap:itaxpf:v:24:y:2017:i:5:d:10.1007_s10797-016-9435-y is not listed on IDEAS
    2. Bucovetsky, S., 1995. "Rent seeking and tax competition," Journal of Public Economics, Elsevier, vol. 58(3), pages 337-363, November.
    3. Matthias Wrede, 2006. "Labor and household mobility: efficiency and equilibrium," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(1), pages 117-131, March.
    4. Hoel, Michael, 2004. "Interregional interactions and population mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 419-433, November.
    5. Braid, Ralph M., 2005. "Tax competition, tax exporting and higher-government choice of tax instruments for local governments," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1789-1821, September.
    6. Myers, Gordon M. & Papageorgiou, Yorgos Y., 1997. "Efficient Nash equilibria in a federal economy with migration costs," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 345-371, August.
    7. Mutsumi Matsumoto, 2000. "A Note on the Composition of Public Expenditure under Capital Tax Competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 691-697, December.
    8. Hoel, Michael, 2002. "no title provided," University of California at Santa Barbara, Economics Working Paper Series qt5cb1x2jm, Department of Economics, UC Santa Barbara.
    9. Hercowitz, Zvi & Pines, David, 1997. "Migration between home country and diaspora: An economic analysis," Journal of Public Economics, Elsevier, vol. 65(1), pages 45-59, July.
    10. Robin Boadway & Michael Keen, 1996. "Efficiency and the optimal direction of federal-state transfers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(2), pages 137-155, May.
    11. Wellisch, Dietmar, 1996. "Decentralized fiscal policy with high mobility reconsidered: Reasons for inefficiency and an optimal intervention scheme," European Journal of Political Economy, Elsevier, vol. 12(1), pages 91-111, April.
    12. Wellisch, Dietmar, 1992. "On the decentralized provision of public goods with spillovers in the presence of household mobility," Tübinger Diskussionsbeiträge 19, University of Tübingen, School of Business and Economics.
    13. Inman, Robert P. & Rubinfeld, Daniel L., 1996. "Designing tax policy in federalist economies: An overview," Journal of Public Economics, Elsevier, vol. 60(3), pages 307-334, June.
    14. Richter, Wolfram F. & Wellisch, Dietmar, 1996. "The provision of local public goods and factors in the presence of firm and household mobility," Journal of Public Economics, Elsevier, vol. 60(1), pages 73-93, April.
    15. Berliant, Marcus & Rothstein, Paul, 2000. "On Models with an Uncongestible Public Good and a Continuum of Consumers," Journal of Urban Economics, Elsevier, vol. 48(3), pages 388-396, November.
    16. Volker Arnold, 2005. "Competitive Versus Cooperative Federalism: Is a Fiscal Equalization Scheme Necessary from an Allocative Point of View?/ Kompetitiver versus kooperativer Föderalismus: Ist ein horizontaler Finanzausgle," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 225(3), pages 259-282, June.
    17. Lockwood, Ben, 2001. "Tax competition and tax co-ordination under destination and origin principles: a synthesis," Journal of Public Economics, Elsevier, vol. 81(2), pages 279-319, August.
    18. Bucovetsky, S., 2011. "Incentive equivalence with fixed migration costs," Journal of Public Economics, Elsevier, vol. 95(11), pages 1292-1301.
    19. Bucovetsky, Sam, 1998. "Federalism, equalization and risk aversion," Journal of Public Economics, Elsevier, vol. 67(3), pages 301-328, March.
    20. Gottfried, Peter, 1995. "Some additional considerations regarding efficient allocations in a federation," Tübinger Diskussionsbeiträge 48, University of Tübingen, School of Business and Economics.

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