Paper #631

Título:

Tax incentives and the city

Autores:

Teresa Garcia-Milà y Therese J. McGuire

Fecha:

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

Descargar el paper en formato PDF