In this paper, we model a federal economy where perfectly mobile labour supply is taxed on an ad valorem basis by the federal as well as lower-level (state) governments. We find that either under- or overtaxation occurs, under similar conditions as in Keen and Kotsogiannis (2002, 2004). However,...

With the application of dynamic spatial panel model under China's decentralization framework, this paper elaborates the impacts of the “horizontal strategic interaction” among local governments, as well as the “vertical common reaction” between central and local governments, on the...