Competing for Capital in a "Lumpy" World

Hans Jarle Kind, K.H.M. Knarvik and Guttorm Schjelderup
Authors registered in the RePEc Author Service: Karen Helene Ulltveit-Moe

Working Papers from Norwegian School of Economics and Business Administration-

Abstract: This paper uses a new economic geography model to analyze tax competition between two countries trying to attract internationally mobile capital. Each government may levy a source tax on capital and a lump sum tax on fixed labor. If industry is concentrated in one of the countries, the analysis finds that the host country will gain from setting its source tax on capital above that of the other country. If particular, the host may increase its welfare per capita by setting a positive source tax on capital and capture the positive externality that arise in the agglomeration. If industry is not concentrated, however, both countries will subsidize capital.

Keywords: CAPITAL; TAXATION; GEOGRAPHY; COMPETITION (search for similar items in EconPapers)
JEL-codes: E22 E62 H2 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1999
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Citations: View citations in EconPapers (52)

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Related works:
Journal Article: Competing for capital in a 'lumpy' world (2000)
Working Paper: Competing for Capital in a "Lumpy" World (2000)
Working Paper: Competing for Capital in a 'Lumpy' World (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:norgee:7/99

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