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Article Dans Une Revue Journal of Urban Economics Année : 2006

Capital indivisibility and tax competition: Are there too many business areas when some of them are empty?

Résumé

In this paper, we propose a model where local jurisdictions must engage a development cost before competing for hosting a firm with uncertain preferences among possible sites. We first show that even an optimizing central planner managing all the jurisdictions develops more sites than there are plants to host. Doing so, he diversifies his supply and has a higher probability of hosting the firm. Then, we show that, if every jurisdiction is managed by a local government, there are more developed sites than with the central planner, which implies excess supply.

Dates et versions

hal-02318750 , version 1 (17-10-2019)

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Hubert Jayet, Sonia Paty. Capital indivisibility and tax competition: Are there too many business areas when some of them are empty?. Journal of Urban Economics, 2006, 60 (3), pp.399-417. ⟨10.1016/j.jue.2006.04.001⟩. ⟨hal-02318750⟩
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