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Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany

Ivo Bischoff (), Simon Melch () and Eva Wolfschuetz ()
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Ivo Bischoff: University of Kassel
Simon Melch: University of Kassel
Eva Wolfschuetz: University of Kassel

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: An increasing number of municipalities cooperates in the field of economic development. In this paper, we focus on a specific instrument in this field, namely the development of joint business parks. We apply a hazard model to data from West-German municipalities between 2000 and 2015. We find inter-local business parks to be more frequent among small municipalities and in constellations where suitable land is scarce. Our main focus rests on the role of tax competition. An analogy building on the literature on international tax coordination supports the hypothesis that inter-local business parks are more likely in regions where tax competition is intense. The evidence is affirmative: We find that the likelihood of inter-local business park formation to increase in the intensity of local tax competition.

Keywords: Inter-local business parks; inter-municipal cooperation; tax competition; hazard model; Germany (search for similar items in EconPapers)
JEL-codes: H77 H71 R58 R14 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eur, nep-geo, nep-pbe, nep-pub and nep-ure
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