Year: 1998
Author: Arnold, Volker
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 118 (1998), Iss. 4 : pp. 521–536
Abstract
This paper analyses a Nash tax competition between two jurisdictions. These differ in their endowments with immobile labour but they share a common capital market. Each jurisdiction uses a unit tax on capital to finance the provision of a local public good. Within such a framework a lot of interesting results have been obtained since the contributions of Bucovetsky (1991) and Wilson (1991). Surprisingly, a central result of the older literature on tax competition was not questioned. This states that there will be an underprovision of the local public good. In this paper the possibility is shown, that in a model of the Bukovetsky-Wilson-type the smaller jurisdiction overprovides, because it can shift some of the burden of the tax onto absentee capital owners.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/schm.118.4.521
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 118 (1998), Iss. 4 : pp. 521–536
Published online: 1998-04
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 16