Economic activity tends to cluster. This results in productivity gains. For policy makers this offers an opportunity to … formulate and promote policies that foster clustering of economic activity. Paradoxically, although agglomeration rents are … often found in empirical research a rationale for cluster policies does not exist. A brief tour through the literature shows …

effects on home and job location, on land use, and on agglomeration benefits are hard to pin down. We develop a spatial …

vertically), jurisdictional size asymmetries, and the potential for agglomeration economies. We survey the relevant theoretical … and of taxation in the presence of agglomeration rents. …

. Theories based on agglomeration economies offer natural explanations for these observations. …

Our paper extends the capital tax competition literature by incorporating heterogeneous capital and agglomeration. Our … model nests the standard tax competition model as well as the special case in which there is agglomeration but no firm …/capital heterogeneity and the opposite case, firm heterogeneity with no agglomeration. We build on the existing tax competition literature …