Tax competition and revelation of preferences for public expenditure

Article Abstract:

The optimal policies for the central government of a federal country are examined wherein the federation of jurisdictions are identical except for their taste for public spending and each uses a source-based tax on capital income to fund its public expenditure. The jurisdictions' taste for spending is considered as a characteristic that is private information to their respective governments. Without any federal government intervention, the high-taste jurisdictions will be imposed a higher tax rate than the low-taste jurisdictions, implying a misallocation of the federation's capital endowment between the two classes of jurisdiction. It will also violate the Samuelson Rule for optimal balance between private and public consumption both in the high-taste and the low-taste jurisdictions. In this scenario, the central government will seek an optimal policy.

Public Finance Activities, Local Government Expenditures, Federalism, Government spending policy, Public expenditures, Intergovernmental tax relations, Local finance

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Asymmetric tax competition

Article Abstract:

Nash equilibrium is analyzed in the case of two jurisdictions establishing tax rates on mobile tax bases. Differences in population imply that there are differences in taxes. The smaller jurisdiction imposes a lower tax rate under equilibrium conditions, which results in favorable benefits to the residents when compared to residents of the larger jurisdiction. The Nash equilibrium is not efficient, but the allocation resulting from the merger of the two jurisdictions is efficient. The residents of the smaller jurisdiction suffer from the merger if population differences are large enough.

Taxation, Equilibrium (Economics)

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One-stage structural models to explain city size

Article Abstract:

Past research has used two-stage structural models to evaluate city size, but current research proposes using one-stage regression models with non-normal and normal errors to determine city size. The models are valid because they allow for the common truncation deficiency in data related to city size, they use conditional distributions for the dependent variable, and they include city-level factors. A sample of 121 metropolitan areas is used to test the models, and research findings are discussed.

City planning, Urban planning, Municipal research

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