Agglomeration and Tax Competition

By Rainald Borck, Michael Pflüger. Social Science Research Network, 2006

212 citations recorded by the source corpus.

Tax competition for a mobile factor is different in 'new economic geography settings' compared to standard tax competition models. The agglomeration rent which accrues to the mobile factor in the core region can be taxed. Moreover, a tax differential between the core and the periphery can be maintained. The present paper reexamines this issue in a setting which, in addition to core-periphery equilibria, exhibits stable equilibria with partial agglomeration. We show that a tax differential may arise as an equilibrium of the tax game even when there is only partial agglomeration and the mobile factor does not derive an agglomeration rent.

Subfields: Accounting, Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/66b3c01bbfaf2596c075e9fcb79f0edf51a14627

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Citations in the corpus

Do Agglomeration Economies Reduce the Sensitivity of Firm Location to Tax Differentials (2012, unknown): “In models that accommodate partially agglomerated configurations even in the absence of taxes, more strongly agglomerated equilibria imply lower elasticities of firm counts relative to tax differentials (Borck and Pflüger, 2006).”
A Nash bargaining solution to models of tax and investment competition: tolls and investment in serial transport corridors (2010, background): “…the seminal paper by Mintz and Tulkens (1986), an extensive literature has been developed; important contributions include, among many others, Kanbur and Keen (1993), Wilson (1999), Janeba (2000), Zodrow (2003), Keen and Kotsogiannis (2003), Wilson and Wildasin (2004), and Borck and Pflüger (2006).”
Competition for firms in an oligopolistic industry: The impact of economic integration (2010, background): “A second literature strand has analysed tax competition for internationally mobile Þrms in models of the new economic geography (Kind et al., 2000; Baldwin and Krugman, 2004; Ottaviano and van Ypersele, 2005; Borck and Pßüger, 2006).”
The Demand for Tax Haven Operations (2006, background): “A locational advantage may also stem from agglomeration externalities that raise the returns to capital in the presence of a large preexisting capital stock (see Kind, Knarvik and Schjelderup (2000) and Borck and Pfluger (2006) for theoretical analyses). 8 It is far from clear, however, that tax hav”