Fiscal competition and regional differentiation

M. Justman, Jacques Thisse () and Tanguy van Ypersele ()

No 2001024, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.

Keywords: Þscal competition; regional development; infrastructure; horizontal differentiation (search for similar items in EconPapers)
JEL-codes: R58 R12 H73 O38 (search for similar items in EconPapers)
Date: 2001-05-01
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Journal Article: Fiscal competition and regional differentiation (2005)
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