Transport costs, capital mobility and the provision of local public goods
Using a new economic geography model with local governments, this study analyzes the relation between transport costs, capital mobility and the provision of local public goods that improve regional productivity. First, if capital is immobile, the effect of local public goods on regional competitiveness engenders over-provision of local public goods, whereas the interregional spillover engenders under-provision of local public goods. As transport costs fall, the latter effect becomes stronger than the former; consequently, the provision status of local public goods changes from under-provision to over-provision. Secondly, if capital is mobile, capital flows to regions with a larger market (higher productivity) when transport costs are high (low). Such capital mobility changes the local public policy from under-provision to over-provision as transport costs fall.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Justman, Moshe & Thisse, Jacques-François & van Ypersele, Tanguy, 2001.
"Taking the Bite Out of Fiscal Competition,"
CEPR Discussion Papers
3109, C.E.P.R. Discussion Papers.
- Forslid, Rikard & Andersson, Fredrik, 1999.
"Tax Competition and Economic Geography,"
Research Papers in Economics
2000:5, Stockholm University, Department of Economics.
- Andersson, Fredrik & Forslid, Rikard, 1999. "Tax Competition and Economic Geography," CEPR Discussion Papers 2220, C.E.P.R. Discussion Papers.
- Fredrik Andersson & Rikard Forslid, 2000. "Tax Competition and Economic Geography," Econometric Society World Congress 2000 Contributed Papers 1356, Econometric Society.
- Martin, Philippe & Rogers, Carol Ann, 1994.
"Industrial Location and Public Infrastructure,"
CEPR Discussion Papers
909, C.E.P.R. Discussion Papers.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-499, June.
- KEEN, Michael & MARCHAND, Maurice, 1996.
"Fiscal Competition and the Pattern of Public Spending,"
CORE Discussion Papers
1996001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
- Keen, M. & Marchand, M., "undated". "Fiscal competition and the pattern of public spending," CORE Discussion Papers RP 1284, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Hindriks, Jean, 1999. "The consequences of labour mobility for redistribution: tax vs. transfer competition," Journal of Public Economics, Elsevier, vol. 74(2), pages 215-234, November.
- Jan K. Brueckner, 2004. "Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 133-153, 03.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
- Spiros Bougheas & Panicos Demetriades & Edgar Morgenroth, 1996.
"Infrastructure, Transport Costs and Trade,"
Keele Department of Economics Discussion Papers (1995-2001)
96/7, Department of Economics, Keele University.
- David Aschauer, 1988.
"Is public expenditure productive?,"
88-7, Federal Reserve Bank of Chicago.
- Emmanuelle Reulier & L. Silveira Costa & I.N. Ogboyi, 2002. "Fiscal competition," Post-Print halshs-00078349, HAL.
- Anwar, Sajid, 2001. "Government spending on public infrastructure, prices, production and international trade," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(1), pages 19-31.
- Boris Maurer & Uwe Walz, 2000. "Regional Competition for Mobile Oligopolistic Firms: Does Public Provision of Local Inputs Lead to Agglomeration?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 353-375.
- Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
- Douglas Holtz-Eakin & Mary E. Lovely, 1995.
"Scale Economies, Returns to Variety, and the Productivity of Public Infrastructure,"
NBER Working Papers
5295, National Bureau of Economic Research, Inc.
- Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Scale economies, returns to variety, and the productivity of public infrastructure," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 105-123, April.
When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:38:y:2008:i:1:p:70-80. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.