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Does fiscal coopération increase local tax rates in urban areas?

  • Sylvie Charlot


    (INRA-GAEL (UMR 1215), 1221 rue des résidences 38400 Saint Martin d'Hères (France))

  • Sonia Paty


    (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)

  • Virginie Piguet


    (INRA UMR1041 CESAER, 26 boulevard Dr Petitjean, BP 87999, 21079 Dijon Cedex, France)

The main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country, using the French experience in urban municipalities. We estimate a model of tax setting for local business tax using spatial and dynamic econometric techniques, for the period 1993-2003 and an unbalanced data set. As predicted by the theory, we find that reducing the number of municipalities is likely to limit tax competition and, as a consequence, increase local business tax rates.

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Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1219.

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Date of creation: 2012
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Handle: RePEc:gat:wpaper:1219
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  1. Hoyt, William H., 1991. "Property taxation, Nash equilibrium, and market power," Journal of Urban Economics, Elsevier, vol. 30(1), pages 123-131, July.
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  23. repec:adr:anecst:y:2007:i:87-88:p:03 is not listed on IDEAS
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