Political support for tax decentralisation

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

We present a spatial model of a city with two unequally productive jurisdictions. City residents bear a commuting cost to work in either of the two jurisdictions. Each jurisdiction must finance a public budget with a wage and a head tax. We compare the first best optimum to tax decentralization. From the total welfare viewpoint, tax competition is always inefficient. However, majoritarian local governments may prefer the inefficient tax decentralization to the first best.
Original languageEnglish
Pages (from-to)1013-1030
JournalJournal Of Public Economic Theory
Volume9
Issue number6
DOIs
Publication statusPublished - 1 Jan 2007

Keywords

  • FACTOR ENDOWMENTS
  • COMPETITION
  • MIGRATION;
  • JURISDICTIONS
  • INSTRUMENTS
  • CENTERS
  • SEARCH
  • MODEL
  • CITY

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