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Title:Tax Policy, Location Choices, and Market Structure PDF Logo
Authors:Pfann, Gerard A.
van Kranenburg, Hans
Issue Date:2002
Series/Report no.:IZA Discussion paper series 499
Abstract:A structural model of entry and fiscal policy is presented. It shows that taxation of variable production costs can increase product prices, lower competition, and reduce the availability of new products in small markets. The model?s test is based on a unique nationwide fiscal experiment. We study the effects of the 1869 stamped paper tax reform act on the market for daily newspapers in the Netherlands. The econometric analysis uses data on when and where the newspapers existed and were introduced together with demographic census data from 1859 and 1869. The results confirm the model?s predictions and show how taxation affects strategic business location decisions.
Subjects:quasi-experiment
industrial organization
fiscal policy
cities
JEL:L82
L16
C41
L13
D43
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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