International markets for tradable emission permits (TEP) co-exist with national energy taxation. A firm trading emission permits in the international market also pays energy taxes in its host country, thus creating an interaction between the international TEP-market and national energy taxes....

Regions can benefit by offering infrastructure services that are differentiated by quality, thus segmenting the market for industrial location. Regions that compete on infrastructure quality have an incentive to increase the degree of differentiation between them. This places an upper bound on...

For patriotic citizens, living in their native country is intrinsically preferable compared to living in the diaspora. In this paper, we analyze the implications of such a patriotic lock-in in a world with international migration and redistributive taxation. In a formal model of redistribution...

This Paper tackles the issue of international fiscal coordination in a world where markets are integrated but national governments are sovereign. The consequences of capital market liberalization to national fiscal policies and possible remedies to resulting inefficiencies are analysed. A...

If some, but not all, countries are cooperating to reduce CO2 emissions, it can be argued that: A high carbon tax on carbon-intensive tradable sectors in the cooperating countries will reduce the production of goods from these sectors, and therefore CO2 emissions, in those countries. This will...

This paper attempts to give a meaning to the empty concept of subsidiarity. It examines various kinds of government activity with respect to the optimal layer of government in Europe at which these activities should be performed. The paper criticizes Europe's industrial policies and its...

We study how political boundaries and fiscal competition interact with the labor and land markets to determine the economic structure and performance of metropolitan areas. Contrary to general belief, institutional fragmentation need not be welfare-decreasing, and commuting from the suburbs to...

This paper investigates the impacts of capital mobility and tax competition in a setting with imperfect matching between firms and workers. The small country attracts fewer firms than the large one but accommodates a share of the industry that exceeds its capital share - a reverse home market...

Governments do not have perfect information regarding the priorities and the needs of different groups in the economy. This lack of knowledge opens the door for different groups to lobby the government in order to receive the government’s support. We set up a model of hierarchical contests and...

Both individual experiences and community characteristics influence how much people trust each other. Using individual level data drawn from US localities we find that the strongest factors associated with low trust are: i) a recent history of traumatic experiences; ii) belonging to a group that...