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We extend the literature on local income tax competition by allowing for inter-jurisdictional spillovers and imperfect rivalry in consumption of a publicly provided good. Comparing decentralized second-best results of a theoretical model with an efficient benchmark, we identify three...
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unambiguously less disruptive or social welfare under decentralization. Moreover, foreign rather than domestic private nterests may ….ective under decentralization, since local firms always end p forming a local monopoly. However, we show that an institutional …
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