Taxes, Agglomeration Rents and Location Decisions of Firms

Karen Crabbé and Karolien De Bruyne ()

De Economist, 2013, vol. 161, issue 4, 446 pages

Abstract: The goal of this paper is to analyze the individual impact of tax rates and agglomeration rents as well as their interaction on location decisions of manufacturing firms within Belgium. Theoretically, both location determinants may weaken each other’s impact. Using a unique 10-year dataset concerning the number of newly setup manufacturing firms at the sector level for 43 Belgian districts, we show that local effective tax rates have a negative impact on location decisions. Moreover, location-specific supply-side agglomeration rents attract new firms and their impact appears to be even stronger for more spatially concentrated sectors. Finally, we show that a higher effective tax rate in a district does not necessarily deter new firms in more agglomerated districts, pointing to the existence of taxable location-specific agglomeration rents. Copyright Springer Science+Business Media New York 2013

Keywords: Taxes; Agglomeration rents; Location decisions; Interaction terms in non-linear models; H71; F21; R30 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10645-013-9215-3 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Taxes, agglomeration rents and location decision of firms (2011)
Working Paper: Taxes, agglomeration rents and location decision of firms (2010)
Working Paper: Taxes, Agglomeration Rents and Location Decisions of Firms (2010)
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:kap:decono:v:161:y:2013:i:4:p:421-446

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10645/PS2

DOI: 10.1007/s10645-013-9215-3

Access Statistics for this article

De Economist is currently edited by Rob Alessie, Bas ter Weel, Casper van Ewijk, Jan C. van Ours and Frank de Jong

More articles in De Economist from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().