Decentralization and Tax Competition between Asymmetrical Local Governments

Clément Carbonnier

Public Finance Review, 2013, vol. 41, issue 4, 391-420

Abstract: This article presents a model of tax competition between an arbitrarily large number of asymmetrical jurisdictions. Tax competition induces lower corporate taxes and lower public input provision than does tax coordination. This bias decreases with respect to the size and number of jurisdictions. Tax competition constitutes a cost of decentralization that may balance the gains presented by the decentralization theorem. A French panel of municipalities and intermunicipal jurisdictions is used to test these results, which are confirmed. Furthermore, the corporate tax increase due to cooperation leads to an increase in the corporate tax base: the fully decentralized situation is suboptimal.

Keywords: fiscal federalism; tax competition; corporate taxes; public capital (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1091142113482352 (text/html)

Related works:
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:sae:pubfin:v:41:y:2013:i:4:p:391-420

DOI: 10.1177/1091142113482352

Access Statistics for this article

More articles in Public Finance Review
Bibliographic data for series maintained by SAGE Publications ().