Regional tax competition: Evidence from French regions

Emmanuelle Reulier and Yvon Rocaboy
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Emmanuelle Reulier: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: Two mechanisms can lead to fiscal strategic interactions between local jurisdictions. The first is due to the tax base mobility. Authorities use fiscal variables to attract new resources. The second is related to information asymmetries between the politicians and the constituency. To reduce these asymmetries, voters can compare their fiscal situation with the one in neighbouring jurisdictions. These two channels lead to what can be referred to as 'mobility-led' and 'information-led' tax competition. This paper aims to discriminate between these two tax competition models in the case of the French regions. The econometric tests suggest that when taxes are paid by voters, the politicians in office seem to be involved in an 'information-led' tax competition, while in the case of taxes paid by firms, the mobility of the tax base seems to be the best way to explain strategic fiscal interactions.

Keywords: Yardstick competition; tax competition; local taxes (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

Published in Regional Studies, 2009, 43 (7), pp.915 - 922. ⟨10.1080/00343400801932334⟩

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Journal Article: Regional Tax Competition: Evidence from French Regions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00350373

DOI: 10.1080/00343400801932334

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