Resource title

The role of mobility in tax and subsidy competition

Resource image

image for OpenScout resource :: The role of mobility in tax and subsidy competition

Resource description

In this paper, we analyse the role of mobility in tax and subsidy competition. Our primary result is that increasing relocation mobility of firms leads to increasing net tax revenues under fairly weak conditions. While enhanced relocation mobility intensifies tax competition, it weakens subsidy competition. The resulting fall in the governments' subsidy payments over-compensates the decline in tax revenues, leading to a rise in net tax revenues. We derive this conclusion in a model in which two governments are first engaged in subsidy competition and thereafter in tax competition, and firms locate and potentially relocate in response to the two political choices.

Resource author

Alexander Haupt, Tim Krieger

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26600

Resource license

Adapt according to the presented license agreement and reference the original author.