Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/76532 
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper No. 1172
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper provides an economic explanation for the increasing reliance of the state on revenue from user charges on excludable public goods. We develop a model with many identical countries. The government of each country levies a capital tax on the domestic production sector and supplies an excludable public good to heterogeneous households. Under immobile capital, the price on the public good is zero. Under mobile capital, in contrast, the countries engage in tax competition and each country chooses a strictly positive price on the public good. With quasi-linear preferences, the reliance on user charges is shown to increase as tax competition becomes more intensive.
Subjects: 
excludable public goods
tax competition
Document Type: 
Working Paper
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