Fiscal competition, convergence and agglomeration

Arbeitspapier

This paper analyzes the impact of fiscal competition through infrastructure in a New Economic Geography framework. It is shown that regional competition leads to convergence if the trade costs are high but induces divergence if trade cost have fallen below a certain value. Moreover, fiscal competition yields an overprovision if the trade costs are sizable while it leads to underprovision if the regions are highly integrated. Finally, a trade-off between regional convergence and efficiency arises since the efficient distribution of regional infrastructure requires full agglomeration for sufficiently low trade costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2084

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration ; International Fiscal Issues; International Public Goods ; Size and Spatial Distributions of Regional Economic Activity
• Subject: Steuerwettbewerb ; Infrastrukturinvestition ; Neue ökonomische Geographie ; Regionale Konzentration ; Regionale Entwicklung ; Entwicklungskonvergenz ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fenge, Robert ; von Ehrlich, Maximilian ; Wrede, Matthias
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/26129
• Last update: 10.03.2025, 11:41 AM CET