Tax competition for commuters

Ji Guo

Regional Science and Urban Economics, 2009, vol. 39, issue 2, 148-154

Abstract: The paper presents a tax competition model in which local governments can use a wage tax or a land tax to finance public expenditure and compete for commuters. In this model the governments provide public capital goods that are considered a factor of production. Thus, an optimal combination of the two taxes must be chosen, to maximize each jurisdiction's residents' consumption. It is argued that, in symmetric competition, the governments will employ only a land tax. However, in asymmetric competition, the signs of the wage taxes depend on jurisdiction sizes and the specific form of the production function.

Keywords: Tax; competition; Commuters; Symmetric; Asymmetric; Efficiency (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:39:y:2009:i:2:p:148-154

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