We characterise a model in which states engage in tax and policy competition with one another to attract mobile capital. The mix of policies chosen is shown to depend on the interaction between a desire to exploit capital for the benefit of domestic residents (labour) and a net marginal...

The paper estimates a parameter that captures congestion in the consumption of general government services provided by Australian state and local governments. From this estimate, the per person cost of general government services is shown to be an increasing function of population size,...