The New Systems Competition

24 Pages Posted: 25 Jan 2002

See all articles by Hans-Werner Sinn

Hans-Werner Sinn

CESifo (Center for Economic Studies and Ifo Institute); National Bureau of Economic Research (NBER); Ludwig Maximilian University of Munich (LMU)

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Date Written: December 2001

Abstract

While the old systems competition took place within closed borders, globalisation has brought about a new type of systems competition that is driven by the mobility of factors of production. The new systems competition is likely to lead to the erosion of the European welfare state, induce a race to the bottom in the sense that capital will not even pay for the infrastructure it uses and erode national regulatory systems. In general, it will suffer from the same type of market failure which induced the respective government activity in the first place. The new systems competition will force inefficient governments to seek national efficiency, but national efficiency does not imply that systems competition will itself be efficient.

Keywords: Fiscal Competition, Regulation, Immigration

JEL Classification: G1, H7

Suggested Citation

Sinn, Hans-Werner, The New Systems Competition (December 2001). Available at SSRN: https://ssrn.com/abstract=296233 or http://dx.doi.org/10.2139/ssrn.296233

Hans-Werner Sinn (Contact Author)

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