Strategic tax and public service competition among local governments

Jørgen Lauridsen, Niels Nannerup () and Morten Skak
Additional contact information
Niels Nannerup: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

No 9/2011, Discussion Papers on Economics from University of Southern Denmark, Department of Economics

Abstract: Tax and public service competition between local governments concerning localisation of new residents is analysed in a setting of economic spillovers which means that also a neighbouring region will benefit from localisation via demand of residents in a border region, (a so-called host region). We identify two basic Nash-equilibrium outcomes of the analysed tax-game. In one of these outcomes local tax rates will be different across the regions – a fact that appears important for (future) empirical studies of local tax competition. Due to the lack of adequate theoretical modelling, studies in this field have often demonstrated spatial dependence of local policy variables without identifying the source of interaction between decision-makers. Our theoretical findings prove to be robust to a range of important expansions of the basic simple framework.

Keywords: Local tax competition; household locational choice; spillover effects; Nash-equilibria (search for similar items in EconPapers)
JEL-codes: H21 H31 H71 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-12-01
New Economics Papers: this item is included in nep-acc, nep-cse, nep-geo, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.sdu.dk/-/media/files/om_sdu/institutte ... _2011/dpbe9_2011.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:sdueko:2011_009

Access Statistics for this paper

More papers in Discussion Papers on Economics from University of Southern Denmark, Department of Economics Department of Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Astrid Holm Nielsen ().