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Do agglomeration forces strengthen tax interactions?

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  • Sylvie Charlot

    () (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement)

  • Sonia Paty

    () (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - PRES Université Lille Nord de France - Université de Lille, Droit et Santé)

Abstract

The main purpose of this paper is to assess the existence of tax interdependencies among French local tax setting by taking into account the agglomeration forces. A model of tax setting for the local business tax is estimated using spatial econometrics techniques for 2002. First, it is shown that the mimicking behaviour between jurisdictions is not more intense in denser areas—in population or economic activity terms—suggesting that tax competition is not stronger as agglomeration increases. Secondly, a positive relationship is observed between tax rate and capital stock only for urban jurisdictions, suggesting a ‘taxable agglomeration rent', as highlighted by new economic geography models.

Suggested Citation

  • Sylvie Charlot & Sonia Paty, 2010. "Do agglomeration forces strengthen tax interactions?," Post-Print halshs-00545121, HAL.
  • Handle: RePEc:hal:journl:halshs-00545121
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00545121
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    1. repec:kap:itaxpf:v:24:y:2017:i:6:d:10.1007_s10797-016-9429-9 is not listed on IDEAS
    2. Sylvie Charlot & Sonia Paty & Virginie Piguet, 2015. "Does Fiscal Cooperation Increase Local Tax Rates in Urban Areas?," Regional Studies, Taylor & Francis Journals, vol. 49(10), pages 1706-1721, October.
    3. Michael P. Devereux & Simon Loretz, 2013. "What Do We Know About Corporate Tax Competition?," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 745-774, September.
    4. Blesse, Sebastian & Martin, Thorsten, 2015. "Let's stay in touch - evidence on the role of social learning in local tax interactions," ZEW Discussion Papers 15-081, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Francisco Delgado & Matías Mayor, 2011. "Tax mimicking among local governments: some evidence from Spanish municipalities," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 10(2), pages 149-164, August.
    6. Aras Zirgulis, 2014. "Is International Capital Tax Competition Fueled by the Quest for Increased Productivity?," Proceedings of International Academic Conferences 0702435, International Institute of Social and Economic Sciences.
    7. Tidiane Ly & Sonia Paty, 2018. "Local Taxation and Tax Base Mobility: Evidence from a business tax reform in France," Working Papers 1811, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    8. Cassette, Aurélie & Di Porto, Edoardo & Foremny, Dirk, 2012. "Strategic fiscal interaction across borders: Evidence from French and German local governments along the Rhine Valley," Journal of Urban Economics, Elsevier, vol. 72(1), pages 17-30.
    9. Aras Zirgulis, 2014. "Is International Capital Tax Competition Fueled by the Quest for Increased Productivity?," International Journal of Economic Sciences, University of Economics, Prague, vol. 2014(4), pages 99-116.

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