Journal article

Fiscal competition over taxes and public inputs

Publication Details
Author(s): Hauptmeier S, Mittermaier F, Rincke J
Publisher: Elsevier
Publication year: 2012
Volume: 42
Journal issue: 3
Pages range: 407-419
ISSN: 0166-0462
Language: English


Governments are widely perceived as competing for capital by choosing parameters in a multi-dimensional policy space. We consider the choice of a business tax rate as well as a productive public input by local governments and estimate a model of strategic interaction in both policy instruments. The estimations suggest that local governments use both the business tax rate and public inputs to compete for capital. We find that if neighbors cut their tax rates, governments try to restore competitiveness by lowering their own tax and increasing public inputs. If neighbors provide more infrastructure, governments react by increasing their own spending.

How to cite
APA: Hauptmeier, S., Mittermaier, F., & Rincke, J. (2012). Fiscal competition over taxes and public inputs. Regional Science and Urban Economics, 42(3), 407-419.

MLA: Hauptmeier, Sebastian, Ferdinand Mittermaier, and Johannes Rincke. "Fiscal competition over taxes and public inputs." Regional Science and Urban Economics 42.3 (2012): 407-419.

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