Do Agglomeration Forces Strengthen Tax Interactions?

Sylvie Charlot and Sonia Paty

Urban Studies, 2010, vol. 47, issue 5, 1099-1116

Abstract: The main purpose of this paper is to assess the existence of tax interdependencies among French local tax setting by taking into account the agglomeration forces. A model of tax setting for the local business tax is estimated using spatial econometrics techniques for 2002. First, it is shown that the mimicking behaviour between jurisdictions is not more intense in denser areas—in population or economic activity terms—suggesting that tax competition is not stronger as agglomeration increases. Secondly, a positive relationship is observed between tax rate and capital stock only for urban jurisdictions, suggesting a ‘taxable agglomeration rent’, as highlighted by new economic geography models.

Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:47:y:2010:i:5:p:1099-1116

DOI: 10.1177/0042098009353077

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