Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
983688 | Regional Science and Urban Economics | 2006 | 21 Pages |
Abstract
This paper analyzes the relation between tax competition and interregional transfer in an economic geography framework. In the absence of a transfer scheme, we show that a purely decentralized tax system in an economy with asymmetric regions can lead to more agglomeration effects than those resulting from the free market location equilibrium. Moreover, the model suggests that a transfer mechanism with an explicit redistributive character leads to a lower local tax pressure. Finally, we show that a myopic behavior adopted by the region which contributes to the transfer gives rise to an involuntary decrease in the federal tax.
Related Topics
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Authors
Stéphane Riou,