Bulletin n. 1/2008 | ||
May 2008 | ||
651-657 |
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A Note on the Dynamic Analysis of Fiscal Competition | ||
in Urban Studies , Volume 45, No. 3 , 2008 , Tamai Toshiki | ||
This note presents an analysis of dynamic aspects of fiscal competition in a model with local capital accumulation. This shows that, even when a head tax is available, the optimal capital tax rate is generally non-zero. In addition, a decentralised equilibrium without a head tax might be characterised by overprovision of local public goods in a dynamic fiscal competition model. The source of inefficiency is overaccumulation of local capital. | ||