Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition
This paper explores a question that lies at the intersection of two vast literatures. The goal is to gauge whether the good side of fiscal decentralization, as emphasized by the Tiebout literature, dominates the bad side, as studied in the tax-competition literature. The results, which are derived by numerical simulation, show that either answer to this question is possible. Under favorable conditions, where the curvature of the production function and the dispersion of preferences are both high, the gains from Tiebout sorting are likely to outweigh the loss from the capital-tax distortion, so that the good side of fiscal decentralization dominates. If either of these conditions is absent, however, the bad side can win, making decentralization undesirable. When this happens, the lessons of the Tiebout tradition are overturned, with economic efficiency requiring centralized rather than decentralized provision of public goods.
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.
Volume (Year): 11 (2004)
Issue (Month): 2 (March)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:P.O. Box 86 04 46, 81631 Munich, Germany
Phone: +49 (0)89-9224-1281
Fax: +49 (0)89-907795-2281
Web page: http://www.iipf.org/index.htm
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/public+finance/journal/10797/PS2|
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:11:y:2004:i:2:p:133-153. 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: (Sonal Shukla)or (Rebekah McClure)
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.