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Yardstick competition: which neighbours matter?

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  • Eric Dubois

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  • Sonia Paty

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Abstract

This paper aims at testing the existence of yardstick competition by estimating a fully specified vote-function on a panel data set of 104 French local governments from 1989 to 2001. When comparing the performance of their incumbent to the one of their "neighbours", voters might consider their close geographical neighbours but also the nearby cities that are similar according to some socio-economic characteristics such as population size. The estimation results show that voters sanction their incumbent if their own local housing tax is high. Moreover, we find that voters reward their incumbent when neighbouring cities that are similar in terms of demographic characteristics have high local taxes.
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Suggested Citation

  • Eric Dubois & Sonia Paty, 2010. "Yardstick competition: which neighbours matter?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 433-452, June.
  • Handle: RePEc:spr:anresc:v:44:y:2010:i:3:p:433-452
    DOI: 10.1007/s00168-008-0273-4
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    Cited by:

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    3. Sophie Larribeau & Matthieu Leprince & Touria Jaaidane, 2020. "The Determinants of French Municipal Labor Demand," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2020-01, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    4. Padovano, Fabio & Petrarca, Ilaria, 2014. "Are the responsibility and yardstick competition hypotheses mutually consistent?," European Journal of Political Economy, Elsevier, vol. 34(C), pages 459-477.
    5. Fuess, Roland & Lerbs, Oliver, 2017. "Do Local Governments Tax Homeowner Communities Differently?," Working Papers on Finance 1714, University of St. Gallen, School of Finance.
    6. Stijn Baert & Herman Matthijs & Ilse Verdievel, 2019. "Voting with your wallet? Municipal budget policy and election results," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-11, August.
    7. Cassette, Aurélie & Farvaque, Etienne, 2016. "A dirty deed done dirt cheap: Reporting the blame of a national reform on local politicians," European Journal of Political Economy, Elsevier, vol. 43(C), pages 127-144.
    8. Michael Klien, 2015. "The political side of public utilities: How opportunistic behaviour and yardstick competition shape water prices in Austria," Papers in Regional Science, Wiley Blackwell, vol. 94(4), pages 869-890, November.
    9. Francisco J. Delgado & Santiago Lago-Peñas & Matías Mayor, 2015. "On The Determinants Of Local Tax Rates: New Evidence From Spain," Contemporary Economic Policy, Western Economic Association International, vol. 33(2), pages 351-368, April.
    10. Laurent Van Malderen & Marcel Gerard, 2013. "Testing yardstick competition through a vote-function: evidence from the Walloon municipalities," Economics and Business Letters, Oviedo University Press, vol. 2(4), pages 206-214.
    11. Mattos, Enlinson & Rocha, Fabiana & Maluf Júnior, João, 2017. "Fiscal Strategic Interaction in Brazil: An Analysis of Fiscal War of Ports," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 71(2), July.
    12. Enlinson Mattos & Ricardo Politi, 2014. "Pro-poor tax policy and yardstick competition: a spatial investigation for VAT relief on food in Brazil," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 279-307, January.
    13. Balaguer-Coll, Maria Teresa & Brun-Martos, María Isabel & Forte, Anabel & Tortosa-Ausina, Emili, 2015. "Local governments' re-election and its determinants: New evidence based on a Bayesian approach," European Journal of Political Economy, Elsevier, vol. 39(C), pages 94-108.
    14. Maria Teresa Balaguer-Coll & María Isabel Brun-Martos & Anabel Forte & Emili Tortosa-Ausina, 2014. "Determinants of local governments'­ reelection: New evidence based on a Bayesian approach," Working Papers 2014/06, Economics Department, Universitat Jaume I, Castellón (Spain).
    15. Cassette, Aurélie & Farvaque, Etienne, 2014. "Are elections debt brakes? Evidence from French municipalities," Economics Letters, Elsevier, vol. 122(2), pages 314-316.
    16. Andres Felipe Muñoz, 2016. "Strategic fiscal interactions among local Governments in Colombia," Hacienda Pública Española / Review of Public Economics, IEF, vol. 219(4), pages 161-188, December.

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    More about this item

    Keywords

    H2; H3; H7; D72;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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