Eggert, Wolfgang; Sørensen, Peter Birch - In: Journal of Public Economics 92 (2008) 5-6, pp. 1142-1163
We set up a probabilistic voting model to explore the hypothesis that tax competition improves public sector efficiency and social welfare. In the absence of tax base mobility, distortions in the political process induce vote-maximising politicians to create rents to public sector employees....