IDEAS home Printed from https://ideas.repec.org/a/ucp/nattax/doi10.1086-733246.html

Tax Competition With Intermunicipal Cooperation

Author

Listed:
  • David R. Agrawal
  • Marie-Laure Breuillé
  • Julie Le Gallo

Abstract

We study local tax competition when municipalities can voluntarily cooperate. We compare the intensity of interjurisdictional policy interdependence between competing municipalities within the same “establishment for intermunicipal cooperation” (EIMC) and competing municipalities outside of the cooperative unit. To resolve the endogeneity of the decision to cooperate, we apply the approach of Kelejian and Piras. The strategic response to the average tax rate among peer members of the same EIMC is less intense than the response to the average tax rate of municipalities outside of the cooperative unit. A 1 percentage point decrease in the average tax rate of nonmembers lowers the own-jurisdiction tax rate by 0.58 percentage points, while a 1-unit decrease in the tax rate of towns within the EIMC lowers the own-jurisdiction rate by 0.31 percentage points. Our empirical methods can be used to study strategic interactions within other cooperative groups, including supranational institutions such as the European Union.

Suggested Citation

  • David R. Agrawal & Marie-Laure Breuillé & Julie Le Gallo, 2025. "Tax Competition With Intermunicipal Cooperation," National Tax Journal, University of Chicago Press, vol. 78(1), pages 5-43.
    • Handle: RePEc:ucp:nattax:doi:10.1086/733246
    DOI: 10.1086/733246
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/733246
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/733246
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/733246?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bischoff, Ivo & Das, Sourav & Kosfeld, Reinhold, 2025. "Does inter-municipal cooperation reduce the intensity of tax competition? Evidence on inter-local industrial parks in Germany," European Journal of Political Economy, Elsevier, vol. 87(C).
    2. repec:hal:journl:hal-04549691 is not listed on IDEAS
    3. Guy Gilbert & Thierry Madies & Sonia Paty, 2026. "Asymmetric Decentralization in France: A Municipal-Centered Exception," IDEAGOV Working Papers WP2610, IDEAGOV - International Center for Decentralization and Governance.
    4. Kim, Donghyuk, 2023. "Economic spillovers and political payoffs in government competition for firms: Evidence from the Kansas City Border War," Journal of Public Economics, Elsevier, vol. 224(C).
    5. Nicolas Debarsy & Julie Le Gallo, 2025. "Identification of Spatial Spillovers: Do's and Don'ts," Journal of Economic Surveys, Wiley Blackwell, vol. 39(5), pages 2152-2173, December.
    6. Banaszewska, Monika & Bischoff, Ivo & Bode, Eva & Chodakowska, Aneta, 2022. "Does inter-municipal cooperation help improve local economic performance? – Evidence from Poland," Regional Science and Urban Economics, Elsevier, vol. 92(C).
    7. Brahim Abidar & Slimane Ed-Dafali & Miloudi Kobiyh, 2025. "Determinants of Value-Added Tax Revenue Transfers in Municipalities of Emerging Economies," Economies, MDPI, vol. 13(5), pages 1-27, April.

    More about this item

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:nattax:doi:10.1086/733246. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/NTJ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.