Investment in public infrastructures and tax competition between contiguous regions

Dembour, Carole;Wauthy, Xavier
(2003)

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Abstract
Two contiguous regions compete to attract a population of heterogeneous firms. They choose infrastructure levels in a first stage, then compete in tax. We compare the properties of subgame perfect nash equilibria in this stage-game depending on the intrisic features of the infrastructure considered. Then we derive some implications regarding the scope for cooperation between the regions.
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Dembour, C., & Wauthy, X. (2003). Investment in public infrastructures and tax competition between contiguous regions (ECON Discussion Papers 2003/04).