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Fiscal Competition in Space and Time

  • David Wildasin

    (University of Kentucky)

This paper analyzes fiscal competition among numerous spatially- separated jurisdictions in an explicitly dynamic framework. The degree of factor mobility between jurisdictions is imperfect because it is costly and time-consuming to adjust factor stocks. Even if it is harmful in the long run, taxation of mobile factors redistribute income in favor of the owners of immobile resources in the short run. The optimal tax on mobile factors is lower, the faster the speed with which factors adjust to fiscal policy. Anticipated taxes are less beneficial than those that can be imposed unexpectedly.

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File URL: http://econwpa.repec.org/eps/pe/papers/0112/0112004.pdf
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Paper provided by EconWPA in its series Public Economics with number 0112004.

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Date of creation: 10 Dec 2001
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Handle: RePEc:wpa:wuwppe:0112004
Note: Type of Document - ; prepared on TeX; figures: request from author
Contact details of provider: Web page: http://econwpa.repec.org

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  4. Decressin, Jörg & Fatás, Antonio, 1994. "Regional Labour Market Dynamics in Europe," CEPR Discussion Papers 1085, C.E.P.R. Discussion Papers.
  5. Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
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  8. Wildasin, David E. & Wilson, John Douglas, 1998. "Risky local tax bases: risk-pooling vs. rent-capture," Journal of Public Economics, Elsevier, vol. 69(2), pages 229-247, June.
  9. Wildasin, David E., 1999. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," ZEW Discussion Papers 99-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  11. Hercowitz, Zvi & Pines, David, 1991. "Migration with fiscal externalities," Journal of Public Economics, Elsevier, vol. 46(2), pages 163-180, November.
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  17. CREMER, Helmuth & FOURGEAUD, Virginie & LEITE MONTEIRO, Manuel & MARCHAND, Maurice, 1995. "Mobility and Redistribution : A Survey," CORE Discussion Papers 1995066, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Büttner, Thiess, 1998. "Local Business Taxation and Competition for Capital: The Choice of the Tax Rate," ZEW Discussion Papers 98-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  23. Robin Boadway, 1979. "Long-run Tax Incidence: A Comparative Dynamic Approach," Review of Economic Studies, Oxford University Press, vol. 46(3), pages 505-511.
  24. Uwe Walz & Dietmar Wellisch, 1996. "Strategic provision of local public inputs for oligopolistic firms in the presence of endogenous location choice," International Tax and Public Finance, Springer, vol. 3(2), pages 175-189, May.
  25. Bradford, David F., 1978. "Factor prices may be constant but factor returns are not," Economics Letters, Elsevier, vol. 1(3), pages 199-203.
  26. A. B. Treadway, 1969. "On Rational Entrepreneurial Behaviour and the Demand for Investment," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 227-239.
  27. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  28. Patrick J. Kehoe, 1989. "Policy Cooperation Among Benevolent Governments May Be Undesirable," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 289-296.
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