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EnglishThis paper presents a New Economic Geography model with distortionary taxation and endogenized trade costs. Tax reve-nues finance a public good, infrastructure. We show that the in-troduction of costly public investment in infrastructure increases agglomerative tendencies. With respect to the regions’ sizes, in the periphery, the price-index for manufacturing goods decreas-es, whereas for the core, the price-index is rather high since the distortionary effect of taxes dominates. ’Free riding’ or, in terms of regional policy, externally funded infrastructure in-vestment is beneficial for the periphery, which can devote all its tax revenue to local demand support, generating a positive home market effect and driving the catch-up process.
| Titolo: | Taxation, Infrastructure and Endogenous Trade Costs in New Economic Geography. |
| Autore/i: | MARATTIN, LUIGI; S. Gruber |
| Autore/i Unibo: | |
| Anno: | 2010 |
| Rivista: | |
| Digital Object Identifier (DOI): | http://dx.doi.org/10.1111/j.1435-5957.2009.00256.x |
| Abstract: | This paper presents a New Economic Geography model with distortionary taxation and endogenized trade costs. Tax reve-nues finance a public good, infrastructure. We show that the in-troduction of costly public investment in infrastructure increases agglomerative tendencies. With respect to the regions’ sizes, in the periphery, the price-index for manufacturing goods decreas-es, whereas for the core, the price-index is rather high since the distortionary effect of taxes dominates. ’Free riding’ or, in terms of regional policy, externally funded infrastructure in-vestment is beneficial for the periphery, which can devote all its tax revenue to local demand support, generating a positive home market effect and driving the catch-up process. |
| Data prodotto definitivo in UGOV: | 2013-05-31 15:44:27 |
| Appare nelle tipologie: | 1.01 Articolo in rivista |
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http://hdl.handle.net/11585/97387
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