Intra-regional Tax Competition and Economic Geography
We extent a solvable version of the core-periphery agglomeration model to four countries located in two regions. The paper shows that there might still be a race to the bottom in capital income tax rates despite agglomeration rents earned by the mobile factor. We find that intra-regional tax competition is detrimental from a welfare perspective and that tax harmonisation unambiguously makes both countries in the core region better off.
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"Competing for capital in a 'lumpy' world,"
Journal of Public Economics,
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"Agglomeration, Integration and Tax Harmonization,"
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2630, C.E.P.R. Discussion Papers.
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"Economic Geography and the Fiscal Effects of Regional Integration,"
9809, Business School - Economics, University of Glasgow.
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- Peter Birch S�rensen, 2007. "Can Capital Income Taxes Survive? And Should They?," CESifo Economic Studies, CESifo, vol. 53(2), pages 172-228, June.
- Forslid, Rikard, 1999. "Agglomeration with Human and Physical Capital: an Analytically Solvable Case," CEPR Discussion Papers 2102, C.E.P.R. Discussion Papers.
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