Even Small Trade Costs Restore Efficiency in Tax Competition

We introduce transport cost of trade in products into the classical Zodrow and Mieszkowski (1986) model of capital tax competition. It turns out that even small levels of transport cost lead to a complete breakdown of the seminal result, the underprovision of public goods. Instead, there is a symmetric equilibrium with efficient public goods provision in all jurisdictions.

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Year of publication:	2011
Authors:	Runkel, Marco ; Becker, Johannes

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Type of publication:	Article
Type of publication (narrower categories):	Congress Report
Language:	English
Notes:	Runkel, Marco and Becker, Johannes (2011) Even Small Trade Costs Restore Efficiency in Tax Competition. In: Annual Symposium 2011.
Source:	BASE

Persistent link: https://www.econbiz.de/10011425357