Journal Article

No. 2014-12 | March 18, 2014
Tax Competition and the Determination of the Quality of Public Goods PDF Icon

Abstract

In this paper, the author analyzes the behavior of local governments in capital taxation when the financial choices in terms of the quality of public goods are made done by a central planner. More specifically, he asks the question of whether a local government has an interest in taxing the mobile factor in addition to the tax on representative households. Through a comparison of social welfare given the strategies chosen by local governments, the author shows that whatever the quality and cost of public goods, a local government always has an interest in taxing the mobile factor. This leads to a Nash equilibrium in the dominant strategy in their model.

JEL Classification

D00 H20 H41 H70

Citation

A.H. Ould Abdessalam and Eric Kamwa (2014). Tax Competition and the Determination of the Quality of Public Goods. Economics: The Open-Access, Open-Assessment E-Journal, 8 (2014-12): 1—20. http://dx.doi.org/10.5018/economics-ejournal.ja.2014-12

Assessment

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Comments and Questions


Tongam Sihol Nababan - The factors affecting the local tax
March 20, 2014 - 05:02

In determining the tariff of taxation done by the local governments, it should be viewed from the local autonomy policy. Many local governments are free to determine the tariff of taxation without controls of central government. So, I suggest that it is important to predict the involvement of central government ...[more]

... because some public goods are belongs to central government.