学術雑誌論文

学術雑誌論文

text

European Economic Review. 2015, 74, p. 57-78

The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy

Kato, Hayato

Elsevier

英語

text

2015-02

https://doi.org/10.1016/j.euroecorev.2014.11.008

Hayato Kato, The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy, European Economic Review, Volume 74, 2015, Pages 57-78, ISSN 0014-2921, https://doi.org/10.1016/j.euroecorev.2014.11.008.

Agglomeration tendencies of industrial firms significantly affect the nature of tax competition. This paper analyzes tax competition between two countries over an infinite time horizon in an economy with trade costs and internationally mobile industrial firms. Most of the previous studies on tax competition in the 'new economic geography' framework employ static models. In this study, two governments dynamically compete with each other to attract firms through their choices of taxes and subsidies. It is shown that the commitment of the governments to their policies is crucial in determining the distribution of firms in the long run. Specifically, if governments find each others[U+05F3] tax policies credible, then one country will attract all the firms when trade costs are low enough to make agglomeration forces dominant. If policies are not credible, both countries may attract an equal share of firms even when trade costs are low, as the lack of commitment by governments acts as a dispersion force.

© 2014 Elsevier B.V. This manuscript version is made available under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

81781

The importance of government commitment in attracting firms: A dynamic analysis of tax competition in an agglomeration economy

Kato, Hayato

Elsevier

英語

2015-02

European Economic Review

74

57

78

https://doi.org/10.1016/j.euroecorev.2014.11.008

https://hdl.handle.net/11094/81781