Fiscal competition and regional differentiation

Moshe Justman, Jacques Thisse and Tanguy van Ypersele

No 2001024, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.

Keywords: fiscal competition; regional development; infrastructure; horizontal differentiation (search for similar items in EconPapers)
JEL-codes: H73 O38 R12 R58 (search for similar items in EconPapers)
Date: 2001-05
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Fiscal competition and regional differentiation (2005)
Working Paper: Fiscal competition and regional differentiation (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2001024

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