Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
972012 | Journal of Urban Economics | 2006 | 7 Pages |
Abstract
This paper analyzes efficiency in the provision of public goods when there is tax competition, but investors have attachment to home, i.e., a biased preference for investing in the region where they live. Investors are assumed to be heterogeneous in the costs to invest outside the home region. As a result, in comparison with the no attachment case, the capital outflow response to an increase in the tax rate is reduced because only investors facing small mobility costs will move capital out. In a symmetric equilibrium, tax rates are increased and the extent of the underprovision of public goods caused by tax competition is lessened.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Laudo M. Ogura,