EconPapers    
Economics at your fingertips  
 

Investment in public infrastructure with spillovers and tax competition between contiguous regions

Carole Dembour and Xavier Wauthy

Regional Science and Urban Economics, 2009, vol. 39, issue 6, 679-687

Abstract: Two contiguous regions compete to attract a population of heterogeneous firms. They choose infrastructure levels in a first stage and compete in taxes in a second stage. We study the properties of Subgame Perfect Nash equilibria in this stage game depending on the extent to which the benefits of infrastructure spill over from one region to the other. First, we show that the presence of inter-regional spillovers allows jurisdictions to control for the intensity of tax competition and therefore affects the optimal levels of infrastructure selected at equilibrium. Second, by comparing the non-cooperative and cooperative outcomes, we show that the extent to which regions overinvest in infrastructures negatively depends on the intensity of the spillovers.

Keywords: Infrastructure; Regional; spillovers; Tax; competition (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166-0462(09)00068-4
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Investment in public infrastructure with spillovers and tax competition between contiguous regions (2009) Downloads
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:eee:regeco:v:39:y:2009:i:6:p:679-687

Access Statistics for this article

Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou

More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2020-02-20
Handle: RePEc:eee:regeco:v:39:y:2009:i:6:p:679-687