This paper examines how capital tax competition affects jurisdiction formation. We describe a locational model of public goods provision, where jurisdictions are represented by coalitions of consumers with similar tastes, and where the levels of taxation and local public goods provision within jurisdictions are selected by majority voting. We show that in this setting interjurisdictional tax competition results in an enlargement of jurisdictional boundaries, and can raise welfare for all members of a jurisdiction even in the absence of intrajurisdictional transfers.
Authors
Research Associate University of Nottingham
Kim is Professor of Economics and Public Policy and Head of the School of Economics at the University of Nottingham.
Perroni, Perroni
Working Paper details
- DOI
- 10.1920/wp.ifs.2000.9710
- Publisher
- IFS
Suggested citation
Perroni, P and Scharf, K. (2000). Tiebout with politics: capital tax competition and jurisdictional boundaries. London: IFS. Available at: https://ifs.org.uk/publications/tiebout-politics-capital-tax-competition-and-jurisdictional-boundaries (accessed: 10 May 2024).
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