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Tax Competition and the Determination of the Quality of Public Goods

Author

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  • A.H. Ould H Ould Abdessalam
  • Eric Kamwa

    (LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles)

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

Suggested Citation

  • A.H. Ould H Ould Abdessalam & Eric Kamwa, 2014. "Tax Competition and the Determination of the Quality of Public Goods," Post-Print hal-01757768, HAL.
    • Handle: RePEc:hal:journl:hal-01757768
    DOI: 10.5018/economics-ejournal.ja.2014-12
    Note: View the original document on HAL open archive server: https://hal.univ-antilles.fr/hal-01757768
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    8. George R. Zodrow & Peter Mieszkowski, 2019. "Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods," World Scientific Book Chapters, in: George R Zodrow (ed.), TAXATION IN THEORY AND PRACTICE Selected Essays of George R. Zodrow, chapter 17, pages 525-542, World Scientific Publishing Co. Pte. Ltd..
    9. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
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    Cited by:

    1. Xiaodong Yang & Jianlong Wang & Jianhong Cao & Siyu Ren & Qiying Ran & Haitao Wu, 2022. "The spatial spillover effect of urban sprawl and fiscal decentralization on air pollution: evidence from 269 cities in China," Empirical Economics, Springer, vol. 63(2), pages 847-875, August.
    2. Tiangui Lv & Hualin Xie & Hua Lu & Xinmin Zhang & Lei Yang, 2019. "A Game Theory-Based Approach for Exploring Water Resource Exploitation Behavior in the Poyang Lake Basin, China," Sustainability, MDPI, vol. 11(22), pages 1-14, November.
    3. Caihua Zhou & Hualin Xie & Xinmin Zhang, 2019. "Does Fiscal Policy Promote Third-Party Environmental Pollution Control in China? An Evolutionary Game Theoretical Approach," Sustainability, MDPI, vol. 11(16), pages 1-18, August.
    4. Guitao Qiao & Dan Yang & Mahmood Ahmad & Zahoor Ahmed, 2022. "Modeling for Insights: Does Fiscal Decentralization Impede Ecological Footprint?," IJERPH, MDPI, vol. 19(16), pages 1-18, August.
    5. Zhang, Jinning & Wang, Jianlong & Yang, Xiaodong & Ren, Siyu & Ran, Qiying & Hao, Yu, 2021. "Does local government competition aggravate haze pollution? A new perspective of factor market distortion," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    public goods; quality; Tax competition; welfare; taxation;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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