This paper explores the normative implications of competition among ‘local’ jurisdictions to attract new industry and income. Within a neoclassical framework, we examine how local officials set two policy variables, a tax (or subsidy) rate on mobile capital and a standard for local environmental quality, to induce more capital to enter the jurisdiction in order to raise wages.
Economic Competition Among Jurisdictions: Efficiency Enhancing or Distortion Inducing?Wallace Oates and Robert Schwab ,
3( 35 )
Journal of Public Economics