Even small trade costs restore efficiency in tax competition

Johannes Becker and Marco Runkel (marco.runkel@tu-berlin.de)

Journal of Urban Economics, 2012, vol. 72, issue 2, 191-195

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)
Date: 2012
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Even Small Trade Costs Restore Efficiency in Tax Competition (2010)
Working Paper: Even Small Trade Costs Restore Efficiency in Tax Competition (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:72:y:2012:i:2:p:191-195

DOI: 10.1016/j.jue.2012.04.006

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