This paper revisits the “taxable agglomeration rents” prediction of geographical economics models by explicitly introducing public goods provision as an extra agglomerationforce. We theoretically show that, in a setting of asymmetric countries, depending on the relative size of public goods...

The paper deals with the question of whether fiscal transfers re-ceived by cities can be justified by a higher cost of producing publicly provided goods. In the model, increasing the population density implies both a higher output per capita due to agglomeration economies and a higher cost of...

With the completion of EMU, tax competition and, more in general, locational competition is high on the EU policy agenda. In contrast to the standard neo-classical reasoning, recent advances in the theory of trade and location have shown that tax competition does not necessarily lead to a race...