Interjurisdictional Competition and Public-Sector Prodigality: The Triumph of the Market over the State?

Michael Rauscher ()

FinanzArchiv: Public Finance Analysis, 2000, vol. 57, issue 1, 89-105

Abstract: It has been argued in the literature that interjurisdictional competition forces the public sector to increase its efficiency and thus helps to tame Leviathan governments. The paper addresses this hypothesis by means of a simple tax-competition model with a Leviathan state. It is seen that the effects that increased factor mobility has on the wastefulness of the public sector are ambiguous. A calibration of the model shows that the share of public funds wasted by the public sector may increase for parameter constellations which are not unrealistic.

JEL-codes: F20 H21 H40 H73 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (21)

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