Even Small Trade Costs Restore Efficiency in Tax Competition

Johannes Becker and Marco Runkel ()

No 100023, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax competition. It turns out that even small levels of transport cost lead to a complete breakdown of the seminal result, the underprovision of public goods. Instead, there is a symmetric equilibrium with efficient public goods provision in all jurisdictions.

Keywords: Tax Competition; Public Goods Provision; Trade (search for similar items in EconPapers)
JEL-codes: F23 H25 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2010-10
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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http://www.fww.ovgu.de/fww_media/femm/femm_2010/2010_23.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: Even small trade costs restore efficiency in tax competition (2012)
Working Paper: Even Small Trade Costs Restore Efficiency in Tax Competition (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:mag:wpaper:100023

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