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Tax competition with spillover public goods in a median location model

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  • Jyh-Fa Tsai

    (National Taipei University)

Abstract

This study explores the role of median location in a core-periphery model (using a footloose entrepreneur version) with public goods. Taxation for each region is used for producing public good with spillovers effect among regions. Two kinds of taxation are considered. One is the Nash tax with the goal of each region’s utility. The other is the optimal taxation with the goal of the sum of each region’s utility. Two kinds of location configurations for three regions are considered: one is an equilateral triangle (with no median location). The other is the configuration in which three points are equidistant between two adjacent points on a line (with median region). The results show that the Nash tax rate of median region will be smaller than that of non-median region for a symmetric distribution of firms. On the contrary, the optimal tax of median region will be higher than that of non-median region.

Suggested Citation

  • Jyh-Fa Tsai, 2019. "Tax competition with spillover public goods in a median location model," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 831-862, October.
    • Handle: RePEc:spr:apjors:v:3:y:2019:i:3:d:10.1007_s41685-019-00139-2
    DOI: 10.1007/s41685-019-00139-2
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    Cited by:

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    2. Fu-Chuan Lai, 2019. "Special feature in honor of Shin-Kun Peng," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 757-759, October.

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