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Local Fiscal Competition: an Intraregional Perspective

Author

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  • Charles B. Wagoner

    (Tulane University)

Abstract

This article extends the theoretical literature on local fiscal competition by concentrating on a form of this behavior that has largely been ignored in the past: intraregional competition. This is competition between political jurisdictions that share physical boundaries; that is, they occupy the same physical space, or are 100% overlapping Under this form of competition, which is essentially a close economy model, issues such as capital flight cannot arise, and so one is free to concentrate on purely internal effects. The author demonstrates that, under certain reasonable conditions, local public goods provision in this framework will more closely approximate first-best levels than will those that arise under the assumption of distortionary commodity taxation.

Suggested Citation

  • Charles B. Wagoner, 1995. "Local Fiscal Competition: an Intraregional Perspective," Public Finance Review, , vol. 23(1), pages 95-114, January.
    • Handle: RePEc:sae:pubfin:v:23:y:1995:i:1:p:95-114
    DOI: 10.1177/109114219502300104
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Epple, Dennis & Zelenitz, Allan, 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1197-1217, December.
    3. Thomas Romer & Howard Rosenthal, 1979. "Bureaucrats Versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 563-587.
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    Cited by:

    1. Esteller-More, Alex & Sole-Olle, Albert, 2001. "Vertical income tax externalities and fiscal interdependence: evidence from the US," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 247-272, April.
    2. Florence TOUYA, 2009. "Tax Interactions with Asymmetric Information and Nonlinear Instruments," Working Papers 9, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2009.

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