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Capital tax competition and household mobility

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  • Eggert, Wolfgang

Abstract

Capital tax competition is analyzed in a model with a single private and a locally supplied public consumption good. As a benchmark case necessary conditions for efficient interregional tax structures are derived and contrasted with the outcome of beggar thy neighbor strategies. If households are immobile an intervention of a central government can be justified to raise efficiency of the NASH equilibrium. In contrast, NASH equilibria are efficient if households are imperfectly mobile because regions have incentives to ensure an efficient interregional resource allocation via granting interregional transfer payments.

Suggested Citation

  • Eggert, Wolfgang, 1995. "Capital tax competition and household mobility," Discussion Papers, Series II 289, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:289
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    Cited by:

    1. Wagener, Andreas, 2001. "Double Bertrand tax competition: a fiscal game with governments acting as middlemen," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 273-297, April.

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