Tax differentials and agglomeration economies in intraregional firm location

Jordi Jofre-Monseny () and Albert Solé-Ollé ()
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Jordi Jofre-Monseny: Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)
Albert Solé-Ollé: Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)

No 2007/2, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs' economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Keywords: Agglomeration economies; Firm location; Local taxes (search for similar items in EconPapers)
JEL-codes: H32 R3 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007
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Citations: View citations in EconPapers (9)

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