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...

The paper analyzes strategic commodity taxation in a model with trade in a single private good which is simultaneously imported by consumers of a high-tax region and exported by its producers. Conditions for the existence of a Nash equilibrium are given and an asymmetry is introduced through...

We develop a model of Tiebout sorting based on decentralized income taxation, which allows for spillovers and imperfect rivalry in consumption of the publicly provided good. We identify three sources of welfare loss from decentralization: Imperfect redistribution, inter-jurisdictional...