Paper #631
- Título:
- Tax incentives and the city
- Autores:
- Teresa Garcia-MilĂ y Therese J. McGuire
- Data:
- Octubre 2001
- Resumen:
- It is difficult to justify tax incentives within the existing economics literature on tax competition. We develop a model in which communities are interested in attracting firms not only for their own capital but also for the “concentration externalities,” a form of agglomeration economies, their location bestows on existing firms. We find that it is efficient in this case for communities to offer tax incentives, defined as a tax rate below the benefit tax level, to firms. We present the recent relocation of the Boeing Corporation's headquarters from Seattle to Chicago as a case study.
- Palabras clave:
- Tax incentives, concentration externalities, agglomeration economies, tax competition, benefit tax
- Códigos JEL:
- H2, H7, R1, R2
- Área de investigación:
- Macroeconomía y Economía Internacional
- Publicado en:
- Brooking-Wharton Papers on Urban Affairs, 2002, pp. 95-132
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