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Tiebout with politics: capital tax competition and jurisdictional boundaries


  • Perroni, Perroni

    (Institute for Fiscal Studies)

  • Kimberley Scharf

    () (Institute for Fiscal Studies and University of Warwick)


This paper examines how capital tax competition affects jurisdiction formation. We describe a locational model of public goods provision, where jurisdictions are represented by coalitions of consumers with similar tastes, and where the levels of taxation and local public goods provision within jurisdictions are selected by majority voting. We show that in this setting interjurisdictional tax competition results in an enlargement of jurisdictional boundaries, and can raise welfare for all members of a jurisdiction even in the absence of intrajurisdictional transfers.

Suggested Citation

  • Perroni, Perroni & Kimberley Scharf, 2000. "Tiebout with politics: capital tax competition and jurisdictional boundaries," IFS Working Papers W97/10, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:97/10

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    References listed on IDEAS

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    6. Lockwood, Ben, 1993. "Commodity tax competition under destination and origin principles," Journal of Public Economics, Elsevier, vol. 52(2), pages 141-162, September.
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    8. Harry Huizinga & Søren Bo Nielsen, "undated". "The Taxation of Interest in Europe: A Minimum Withholding Tax?," EPRU Working Paper Series 97-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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    13. de Crombrugghe, Alain & Tulkens, Henry, 1990. "On Pareto improving commodity tax changes under fiscal competition," Journal of Public Economics, Elsevier, vol. 41(3), pages 335-350, April.
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    Cited by:

    1. Conley, John P. & Konishi, Hideo, 2002. "Migration-proof Tiebout equilibrium: existence and asymptotic efficiency," Journal of Public Economics, Elsevier, vol. 86(2), pages 243-262, November.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations


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