Tax Competition and the Determination of the Quality of Public Goods

A.H. Ould Abdessalam and Eric Kamwa

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Abstract: In this paper, the author analyzes the behavior of local governments in capital taxation when the financial choices in terms of the quality of public goods are made done by a central planner. More specifically, he asks the question of whether a local government has an interest in taxing the mobile factor in addition to the tax on representative households. Through a comparison of social welfare given the strategies chosen by local governments, the author shows that whatever the quality and cost of public goods, a local government always has an interest in taxing the mobile factor. This leads to a Nash equilibrium in the dominant strategy in their model. JEL D00 H20 H41 H70

Keywords: public goods; quality; Tax competition; welfare; taxation (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://hal.univ-antilles.fr/hal-01757768
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Citations: View citations in EconPapers (5)

Published in Economics , 2014, 8 (2014-12), pp.2014 - 2026. ⟨10.5018/economics-ejournal.ja.2014-12⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01757768

DOI: 10.5018/economics-ejournal.ja.2014-12

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