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Taking the bite out of fiscal competition

  • Justman, Moshe
  • Thisse, Jacques-Francois
  • van Ypersele, Tanguy

Regions can benefit by offering infrastructure services that are differentiated by quality, thus segmenting the market for industrial location. Regions that compete on infrastructure quality have an incentive to increase the degree of differentiation between them. This places an upper bound on the number of regions successfully able to participate in the location market, and limits the dissipation of regional surplus through Tiebout competition. It indicates a process of fiscal agglomeration, through which regional concentrations arise, which does not depend on the circular causation underlying much of the recent literature on economic geography.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 52 (2002)
Issue (Month): 2 (September)
Pages: 294-315

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Handle: RePEc:eee:juecon:v:52:y:2002:i:2:p:294-315
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  1. Justman, Moshe & Thisse, Jacques-Francois & van Ypersele, Tanguy, 2005. "Fiscal competition and regional differentiation," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 848-861, November.
  2. JUSTMAN , Moshe & THISSE, Jacques-François, . "Local public funding of higher education when skilled labor is imperfectly mobile," CORE Discussion Papers RP 1460, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521171960.
  4. JUSTMAN, Moshe & THISSE, Jacques-Francois, 1997. "Local public funding of higher education when skilled labor is mobile," CORE Discussion Papers 1997024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Taylor, Leon, 1992. "Infrastructural competition among jurisdictions," Journal of Public Economics, Elsevier, vol. 49(2), pages 241-259, November.
  6. Black, Dan A & Hoyt, William H, 1989. "Bidding for Firms," American Economic Review, American Economic Association, vol. 79(5), pages 1249-56, December.
  7. Martin, Philippe, 1998. "Public Policies, Regional Inequalities and Growth," CEPR Discussion Papers 1841, C.E.P.R. Discussion Papers.
  8. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
  9. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  10. Justman, Moshe & Teubal, Morris, 1995. "Technological infrastructure policy (TIP): Creating capabilities and building markets," Research Policy, Elsevier, vol. 24(2), pages 259-281, March.
  11. Ian King & R. Preston McAfee & Linda Welling, 1993. "Industrial Blackmail: Dynamic Tax Competition and Public Investment," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 590-608, August.
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