Entry in tax competition: a note |
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Authors: | Mutsumi Matsumoto |
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Institution: | 1.Faculty of Economics,Ritsumeikan University,Kusatsu,Japan |
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Abstract: | This paper extends the tax competition analysis of public inputs to the case where the number of regions that compete for
business investment is endogenous. To determine the number of competing regions, a fixed cost of regional development is introduced
into the Zodrow–Mieszkowski model of public-input provision. It is shown that allowing for region entry does not affect the
analytical results of inefficient public-input provision under tax competition. This paper also shows that the equilibrium
number of competing regions is inefficient. |
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Keywords: | |
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