I investigate whether the spatial administrative structure of agglomerations is associatedwith local business tax rates in core cities of agglomerations. Using data for Germanmunicipalities, I define agglomerations based on distances and based on cumulativepopulation densities. The results show that the population share of the core in itsagglomeration is positively associated and the number of surrounding municipalities isnegatively associated with the tax rate of the core. When municipalities consolidate, thecore has the opportunity to increase the tax rate.
Spatial administrative structure municipal borders local business taxation tax competition