We study how fiscal policies and commuting costs determine the geographical distribution of workers and households in an economy. We characterize equilibrium outcomes in a simple two-region model with commuting costs, local public goods, and local infrastructure. We also provide a short survey...

The paper analyzes the effect of fiscal competition when local governments choose the level of public goods that generate spillover effects elsewhere. For instance, law enforcement activities affect both the crime level in the jurisdiction providing the good and in neighboring communities. The...