Fiscal Competition in a Transition Economy
48 Pages Posted: 24 Sep 2007
Date Written: May 15, 2001
Abstract
The paper analyses fiscal competition for mobile capital between identical regions in a transition country. A framework similar to Keen-Marchand (1997) is used to analyse welfare effects of regional competition. It is shown that in very early transition when the share of the old sector is overwhelming, consumers in a transition economy may be better off in a competitive equilibrium. The decision-makers, however, would prefer to coordinate their fiscal policies.
Keywords: tax competition, fiscal competition, transition
Suggested Citation: Suggested Citation
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