HINDRIKS, Jean; PERALTA, Susana; WEBER, Shlomo - Center for Operations Research and Econometrics (CORE), … - 2005
Revenue sharing can be used to discourage low tax regions from competing for capital and firms with high tax regions. However, with heterogeneous regions, revenue sharing involves net transfers across regions and creates a 'moral-hazard' problem that is, regions may want to invest less in market...