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Fiscal competition and regional differentiation

Listed author(s):
  • JUSTMAN, M.
  • THISSE, J.-F.
  • van YPERSELE, T.

Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.

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File URL: http://alfresco.uclouvain.be/alfresco/download/attach/workspace/SpacesStore/45f352de-4f92-4026-bf81-198a59a3b664/coredp_2001_24.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001024.

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Date of creation: 00 May 2001
Handle: RePEc:cor:louvco:2001024
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  1. Anderson, S. P. & Neven, D. J., 1989. "Market efficiency with combinable products," European Economic Review, Elsevier, vol. 33(4), pages 707-719, April.
  2. Taylor, Leon, 1992. "Infrastructural competition among jurisdictions," Journal of Public Economics, Elsevier, vol. 49(2), pages 241-259, November.
  3. Ian King & R. Preston McAfee & Linda Welling, 1993. "Industrial Blackmail: Dynamic Tax Competition and Public Investment," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 590-608, August.
  4. Mansoorian, Arman & Myers, Gordon M., 1997. "On the consequences of government objectives for economies with mobile populations," Journal of Public Economics, Elsevier, vol. 63(2), pages 265-281, January.
  5. Wildasin, D.E., 1987. "Nash equilibria in models of fiscal competition," CORE Discussion Papers 1987020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
  7. Justman, Moshe & Thisse, Jacques-François & van Ypersele, Tanguy, 2001. "Taking the Bite Out of Fiscal Competition," CEPR Discussion Papers 3109, C.E.P.R. Discussion Papers.
  8. Jack High (ed.), 2001. "Competition," Books, Edward Elgar Publishing, number 1751.
  9. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  10. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(2), pages 269-304, June.
  11. Martin, Philippe, 1998. "Public Policies, Regional Inequalities and Growth," CEPR Discussion Papers 1841, C.E.P.R. Discussion Papers.
  12. Dennis Epple & Holger Sieg, 1998. "Estimating Equilibrium Models of Local Jurisdictions," NBER Working Papers 6822, National Bureau of Economic Research, Inc.
  13. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
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  15. repec:ntj:journl:v:52:y:1999:i:n._2:p:269-304 is not listed on IDEAS
  16. Emmanuelle Reulier & L. Silveira Costa & I.N. Ogboyi, 2002. "Fiscal competition," Post-Print halshs-00078349, HAL.
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