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Taxes, traffic jam and spillover in the metropolis

  • Ly, Tidiane Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera
    2019

45

Tax competition
Urban economics
Traffic congestion
Public goods
Mobility
English This paper studies local governments' public policies in a metropolitan area plagued by traffic congestion, where both residents and workers consume local public goods. We develop a new spatial sub-metropolitan tax competition model which features a central city surrounded by suburban towns linked by mobile capital and mobile residents who commute to work. We show that Pareto-efficiency is achieved if towns can retain their workers using labor subsidies. Otherwise, traffic congestion in the city is inefficiently high and local governments respond by setting inefficient public policies: (1) the city over-taxes capital and under-taxes residents, which leads to too little capital and too many residents in the city; (2) local public goods are under-provided in the city and over-provided in the towns.
Language
  • English
Classification
Economics
License
License undefined
Identifiers
  • RERO DOC 327066
  • ARK ark:/12658/srd1319074
Persistent URL
https://n2t.net/ark:/12658/srd1319074
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