EconPapers    
Economics at your fingertips  
 

Tax incentives and the city

Teresa Garcia-Mila and Therese J. McGuire

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: It is difficult to justify tax incentives within the existing economics literature on tax competition. We develop a model in which communities are interested in attracting firms not only for their own capital but also for the “concentration externalities,” a form of agglomeration economies, their location bestows on existing firms. We find that it is efficient in this case for communities to offer tax incentives, defined as a tax rate below the benefit tax level, to firms. We present the recent relocation of the Boeing Corporation's headquarters from Seattle to Chicago as a case study.

Keywords: Tax incentives; concentration externalities; agglomeration economies; tax competition; benefit tax (search for similar items in EconPapers)
JEL-codes: H2 H7 R1 R2 (search for similar items in EconPapers)
Date: 2001-10, Revised 2001-12
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://econ-papers.upf.edu/papers/631.pdf Whole Paper (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:631

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ().

 
Page updated 2020-12-04
Handle: RePEc:upf:upfgen:631