Mergers in fiscal federalism

Abstract

This paper analyzes mergers of regions in a two-tier setting with both horizontal and vertical tax competition. The merger of regions induces three e¤ects on regional and local tax policies, which are transmitted both horizontally and vertically: i) an alleviation of tax competition at the regional level, ii) a rise in the regional tax base, and iii) a larger internalization of tax externalities generated by cities. It is shown that the merger of regions increases regional tax rates while decreasing local tax rates. This Nash equilibrium with mergers is then compared with the Nash equilibrium with coalitions of regions.

Financial globalization and wage inequality

“…In the capital market, we consider the total capital supply for all the regions as $$$ \sum \limits_{i=1}^m{K}_i=m\overline{k} $$$, where $$$ \overline{k} $$$ denotes the endowment of capital in each region. Similar to Breuillé and Zanaj (2013), we know that $$$ \frac{\partial r}{\partial {\tau}_i}=‐\frac{1}{m} $$$, $$$ \frac{\partial {r}_i}{\partial {\tau}_i}=1‐\frac{1}{m} $$$, and $$$ {K}_i=\overline{k} $$$. From Equation (), it is easy to figure out that the supply of products as $$$ 2{c}_i+\gamma \sum \limits_{h\ne i}^m{c}_h=m\left(\alpha ‐v\left({r}_i,{w}_i^s\right)\right) $$$.…”

“…Following Breuillé and Zanaj (2013), we assume that the government's objective is to maximize the regional total output and the public utility coming from public goods as follows:…”

Stability and cooperative solution in stochastic games

“…Tax competition is also relevant in discussing territorial organisation. Marie-Laure Breuillé and Skerdilajda Zanaj 15 analyse how the merger of regions affects capital tax competition in a two-tier territorial organisation where both regions and cities share the same mobile tax base. They identify three effects generated by the merger of regions that impact, directly or indirectly, both regional and local tax choices: (i) the alleviation of tax competition at the regional level, (ii) a scale effect in the provision of regional public goods, and (iii) a larger internalisation of vertical tax externalities generated by cities.…”

Algunas consideraciones sobre las transformaciones actuales de las finanzas locales en Francia

“…El proceso actual de descentralización en Francia suscita un cierto número de temores que se pueden reagrupar en dos grandes categorías: los temores de orden político se expresan por el miedo a un desmembramiento del Estado; los temores de orden más directamente financiero por el riesgo de una explosión de impuestos locales ligada a la extensión de competencias de las colectividades territoriales prevista por la ley relativa a las responsabilidades locales (Piron, 2006); además de otros posibles efectos de largo plazo como sería la relación inversa entre la cantidad de ingresos recaudados por las colectividades locales y el tamaño del gobierno (Ashworth et al, 2013), y sus posibles efectos negativos en la provisión de bienes públicos locales (Breuille y Zanaj, 2013).…”