Agglomeration and Tax Competition

Tax competition for a mobile factor is different in 'new economic geography settings' compared to standard tax competition models. The agglomeration rent which accrues to the mobile factor in the core region can be taxed. Moreover, a tax differential between the core and the periphery can be maintained. The present paper reexamines this issue in a setting which, in addition to core-periphery equilibria, exhibits stable equilibria with partial agglomeration. We show that a tax differential may arise as an equilibrium of the tax game even when there is only partial agglomeration and the mobile factor does not derive an agglomeration rent.

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Year of publication:	2004
Authors:	Borck, Rainald ; Pflüger, Michael
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Steuerwettbewerb \| Kern-Peripherie-Beziehung \| Agglomerationseffekt \| Neue ökonomische Geographie \| Spieltheorie \| Theorie \| economic geography \| agglomeration \| tax competition

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Series:	IZA Discussion paper series ; 1033
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	380019183 [GVK] hdl:10419/20268 [Handle]
Classification:	H73 - Interjurisdictional Differentials and Their Effects ; F22 - International Migration ; F15 - Economic Integration ; R12 - Size and Spatial Distributions of Regional Economic Activity
Source:	EconStor