TY - JOUR
T1 - Fiscal competition and regional differentiation
AU - Justman, Moshe
AU - Thisse, Jacques François
AU - van Ypersele, Tanguy
N1 - Funding Information:
We thank P. Pestieau, K. Stahl and two referees for the helpful comments and suggestions. We are also grateful to the Ministére de l'éducation, de la recherche et de la formation (Communauté française de Belgique), Convention 00/05-262, for funding.
PY - 2005/11/1
Y1 - 2005/11/1
N2 - Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.
AB - Regions can benefit by offering infrastructure services that are differentiated. Competition between regions over potential investors is then less direct, allowing them to realize greater benefits from external investors. The two polar cases of full and incomplete information about investors' needs are studied. In both cases, there is regional differentiation. However, fiscal competition is efficient in the former case but not in the latter. Finally, it is shown that free entry in the location market calls for some regulation because of the excessive number of competing regions that would prevail in equilibrium.
KW - Fiscal competition
KW - Horizontal differentiation
KW - Infrastructure
KW - Regional development
UR - http://www.scopus.com/inward/record.url?scp=27744495544&partnerID=8YFLogxK
U2 - 10.1016/j.regsciurbeco.2005.04.001
DO - 10.1016/j.regsciurbeco.2005.04.001
M3 - Article
AN - SCOPUS:27744495544
SN - 0166-0462
VL - 35
SP - 848
EP - 861
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
IS - 6
ER -