A note on tax competition and public input provision

This note reconsiders and extends the tax competition analysis of Zodrow and Mieszkowski (Journal of Urban Economics 19, (1986) 356-170) regarding public inputs. In their model with capital mobility, both the underprovision and overprovision of public inputs may result from tax competition. However, this note shows that when firms are also mobile across jurisdictions, local governments competing for capital choose inefficiently low levels of public inputs. (C) 1998 Elsevier Science B.V. All rights reserved.