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Regional tax competition : Evidence from French regions

Author

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  • Emmanuelle Reulier

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - CNRS - Centre National de la Recherche Scientifique)

  • Yvon Rocaboy

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - CNRS - Centre National de la Recherche Scientifique)

Abstract

Two mechanisms can lead to fiscal strategic interactions between local jurisdictions. The first is due to the tax base mobility. Authorities use fiscal variables to attract new resources. The second is related to information asymmetries between the politicians and the constituency. To reduce these asymmetries, voters can compare their fiscal situation with the one in neighbouring jurisdictions. These two channels lead to what can be referred to as 'mobility-led' and 'information-led' tax competition. This paper aims to discriminate between these two tax competition models in the case of the French regions. The econometric tests suggest that when taxes are paid by voters, the politicians in office seem to be involved in an 'information-led' tax competition, while in the case of taxes paid by firms, the mobility of the tax base seems to be the best way to explain strategic fiscal interactions.

Suggested Citation

  • Emmanuelle Reulier & Yvon Rocaboy, 2009. "Regional tax competition : Evidence from French regions," Post-Print halshs-00350373, HAL.
  • Handle: RePEc:hal:journl:halshs-00350373 DOI: 10.1080/00343400801932334 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00350373
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    Cited by:

    1. Sylvie Charlot & Sonia Paty & Virginie Piguet, 2015. "Does Fiscal Cooperation Increase Local Tax Rates in Urban Areas?," Regional Studies, Taylor & Francis Journals, pages 1706-1721.

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