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Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany

Author

Listed:
  • Ivo Bischoff

    (University of Kassel)

  • Simon Melch

    (University of Kassel)

  • Eva Wolfschuetz

    (University of Kassel)

Abstract

An increasing number of municipalities cooperates in the field of economic development. In this paper, we focus on a specific instrument in this field, namely the development of joint business parks. We apply a hazard model to data from West-German municipalities between 2000 and 2015. We find inter-local business parks to be more frequent among small municipalities and in constellations where suitable land is scarce. Our main focus rests on the role of tax competition. An analogy building on the literature on international tax coordination supports the hypothesis that inter-local business parks are more likely in regions where tax competition is intense. The evidence is affirmative: We find that the likelihood of inter-local business park formation to increase in the intensity of local tax competition.

Suggested Citation

  • Ivo Bischoff & Simon Melch & Eva Wolfschuetz, 2019. "Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany," MAGKS Papers on Economics 201906, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201906
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    References listed on IDEAS

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    Cited by:

    1. Eva Wolfschuetz, 2020. "The Effect of Inter-municipal Cooperation on Local Business Development in German Municipalities," MAGKS Papers on Economics 202005, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    More about this item

    Keywords

    Inter-local business parks; inter-municipal cooperation; tax competition; hazard model; Germany;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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