Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319137 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17868
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study firm responses to local policies through a survey experiment, providing randomized information on the competitiveness of business tax rates and highway access in their headquarters' municipality. Firms often misperceive local policy competitiveness, especially for tax rates. Investment decisions respond asymmetrically to tax competitiveness. Positive tax rank information reduces investment intentions in neighboring municipalities. Compared to this, negative tax news increase relocation plans. However, most firms receiving bad news plan to continue investing in their headquarters' municipality, indicating home bias. These effects are strongest for mobile firms and corporations. Negative infrastructure news lower location satisfaction but do not influence investment.
Subjects: 
survey experiment
firm location
infrastructure
tax competition
JEL: 
H25
H32
H71
H72
H73
L21
R38
Document Type: 
Working Paper

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