In a theoretical model local jurisdictions provide a public input an d a public consumption good financed by a tax on capital income. When deciding about tax rate and budget structure the jurisdictions will generally respond to each others fiscal choices irrespective of whether the policy is...

A theoretical model describes the local choice of the tax rate on capital income. It establishes preferences and various fiscal conditions - including the tax rates of competing jurisdictions - as determinants of the tax rate. The empirical implications are tested using a large panel of...

This paper discusses how local tax rates of the business tax are set when communities compete for capital as a mobile factor. In a theoretical model communities provide public inputs financed by a tax on capital income in order to maximize a general objective function, which includes residents'...

The paper argues that economic integration causes problems for the labor market of high-wage countries due to cross-border labor mobility and the accompanying increase in labor supply. Empirical evidence is provided from an analysis of regional labor market effects of German re-unification. In...

In the context of EMU fiscal equalization schemes have been proposed as a means to stabilize regions against asymmetric shocks. A theoretical analysis shows that besides reducing the cross-sectional income variance the redistributive element of fiscal equalization causes incentive effects for...

Redistributive grants schemes, such as fiscal equalization, are a common characteristic of local public finance in several countries. However, large and small jurisdictions are treated differently by the respective fiscal equalization schemes that often tend to favour larger jurisdictions. This...

Verschiedene Verbindungen zwischen lokalen Kapitaleinheiten können Komplementaritäten in den Standortentscheidungen begründen: Skalenerträge und Spillovereffekte, Input- Output-Beziehungen bei Transportkosten und EinkommenskreislaufefTekte. In einem stilisierten Modell wird ihr simultaner...

This paper discusses whether the dominant position of the Old Laender's economy in the unified Germany hampers the reemergence of industrial production in the New Laender. For that purpose productivity differences are explained by specialization advantages of industrial agglomerations, which are...

Recent literature has emphasized that redistributive grant systems may tend to internalize fiscal externalities arising from tax competition. This paper further explores the conditions under which local grant systems enforced by the state government will enhance efficiency. A system of...