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Interjurisdictional competition and the efficiency of the public sector: The triumph of the market over the state?

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  • Rauscher, Michael

Abstract

It has been argued in the literature that, interjurisdictional competition forces the public sector to increase its efficiency and thus helps to tame Leviathan governments. The paper addresses this hypothesis by means of a simple taxcompetition model with a Leviathan state. It is seen that the effects of increased factor mobility on the efficiency of the public sector are ambiguous. A calibration of the model shows that a reduction in public-sector efficiency is possible for parameter constellations which are not unrealistic.

Suggested Citation

  • Rauscher, Michael, 1996. "Interjurisdictional competition and the efficiency of the public sector: The triumph of the market over the state?," Kiel Working Papers 732, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:732
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    References listed on IDEAS

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    Cited by:

    1. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 269-304, June.
    2. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    3. Lorz, Oliver, 1998. "Capital mobility, tax competition, and lobbying for redistributive capital taxation," European Journal of Political Economy, Elsevier, vol. 14(2), pages 265-279, May.
    4. Rauscher, Michael, 1997. "Leviathan and Competition among Jurisdictions: The Case of Benefit Taxation," Thuenen-Series of Applied Economic Theory 13, University of Rostock, Institute of Economics.
    5. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
    6. Krishanu Karmakar & Jorge Martinez-Vazquez, 2014. "Fiscal Competition versus Fiscal Harmonization: A Review of the Arguments," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1431, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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    More about this item

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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