Fiscal competition and regional differentiation
(2005) Regional Science and Urban Economics — Vol. 35, n° 6, p. 848-861 (2005)
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- Authors
- Abstract
- Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.
- Affiliations
Ben Gurion University of the Negev Beer Sheva Department of Economics
Citations
Justman, M., Thisse, J.-F., & Van Ypersele, T. (2005). Fiscal competition and regional differentiation. Regional Science and Urban Economics, 35(6), 848-861. https://doi.org/10.1016/j.regsciurbeco.2005.04.001 (Original work published 2005)