Agglomeration, Tax Competition, and Fiscal Equalization

Journal article


Publication Details

Author(s): Wrede M
Journal: International Tax and Public Finance
Publisher: Springer Verlag (Germany)
Publication year: 2014
Volume: 21
Pages range: 1012-1027
ISSN: 0927-5940
Language: English


Abstract


This paper analyzes the impact of fiscal equalization on asymmetric tax competition when positive agglomeration externalities are present. It uses a model focusing on the strategic reason for capital taxes to demonstrate that per capita fiscal capacity equalization improves the spatial allocation of capital provided a sufficiently rich (marginally) larger region and sufficiently strong agglomeration externalities. If tax revenue is used to finance public goods, per capita fiscal capacity equalization generally cannot simultaneously eliminate public good inefficiency and spatial inefficiency. However, the achievement of full efficiency for ex ante identical regions requires excessive (full) equalization in the presence (absence) of agglomeration externalities.



FAU Authors / FAU Editors

Wrede, Matthias Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Sozialpolitik


How to cite

APA:
Wrede, M. (2014). Agglomeration, Tax Competition, and Fiscal Equalization. International Tax and Public Finance, 21, 1012-1027. https://dx.doi.org/10.1007/s10797-013-9295-7

MLA:
Wrede, Matthias. "Agglomeration, Tax Competition, and Fiscal Equalization." International Tax and Public Finance 21 (2014): 1012-1027.

BibTeX: 

Last updated on 2018-19-04 at 02:45