All Title Author
Keywords Abstract


Tax Incentives, Competition and Welfare

DOI: 10.4236/me.2012.35080, PP. 608-616

Keywords: Tax Incentives, Industrial Structure, Competition, Welfare

Full-Text   Cite this paper   Add to My Lib

Abstract:

The main objective of this paper is to analyze the impacts of the concession of tax incentives as a tool for entry promotion in a developing region. The simple model and the numerical example presented indicate that the adoption of tax incentives can cause very important effects. The productive structure could be heavily changed and production could increase improving conditions to consumers that benefit from the larger output and lower prices. Furthermore, the need for strategic action by the government in order to increase the chance of success of their development strategies is also emphasized, especially if one considers that firms often behave strategically.

References

[1]  R. Barro and X. Sala-i-Martin, “Public Finance in Models of Economic Growth,” Review of Economic Studies, Vol. 59, No. 4, 1992, pp. 645-661. doi:10.2307/136012
[2]  D. Rowlands, “Regional Development in Canada: Prob- lems and Prospects,” Canadian Journal of Economics, Vol. 29, No. 1, 1996, pp. S340-S343. doi:10.2307/1925838
[3]  G. T. Sav, “Micro Engineering Foundations of Energy- Capital Complementarity: Solar Do-mestic Water Heat- ers,” Review of Economics and Statistics, Vol. 66, No. 2, 1984, pp. 334-338. doi:10.2307/1925838
[4]  B. Siegel, “Fiscal Incentives and the Economic Develop- ment Game,” LBJ Journal of Public Affairs, Vol. 9, No. 1, 1997.
[5]  R. Kanbur and M. Keen, “Jeux Sans Frontières: Tax Competition and Tax Coordination When Countries Dif- fer in Size,” American Economic Review, Vol. 83, No. 4, 1993, pp. 877-892.
[6]  A. K. Dixit, “A Model Of Duopoly Suggesting a Theory of Entry Barriers,” Bell Journal of Economics, Vol. 10, No. 1, 1979, pp. 20-32. doi:10.2307/3003317
[7]  A. K. Dixit, “The Role of Investment in Entry-Deter- rence,” Economic Journal, Vol. 90, No. 357, 1980, pp. 95- 106. doi:10.2307/2231658
[8]  D. Fudenberg and J. Tirole, “Game Theory,” MIT Press, Cambridge, 1991.
[9]  G. Romp, “Game Theory: Introduction and Applica- tions,” Oxford University Press, Oxford, 1997.
[10]  A. M. Spence, “Investment Strategy and Growth in a New Market,” Bell Journal of Economics, Vol. 10, No. 1, 1979, pp. 1-19. doi:10.2307/3003316
[11]  J. J. Gabszwicz, “Strategic Interaction and Markets,” Ox- ford University Press, Oxford, 1999.
[12]  J. Tirole, “The Theory of Industrial Organization”, MIT Press, Cambridge, 1997.
[13]  C. A. G. Nogueira and P. M. Jorge Neto, “Os Impactos Dos Incentivos Fiscais Sobre a Estrutura Industrial e So- bre a Competitividade das Firmas,” Revista Econ?mica do Nordeste, Vol. 29, 1998, pp. 1087-1100.
[14]  Y. Ohsawa, “Cross-Border Shopping and Commodity Tax Competition among Governments,” Regional Science and Urban Economics, Vol. 29, No. 1, 1999, pp. 33-51. doi:10.1016/S0166-0462(97)00028-8
[15]  R. Gibbons, “Game Theory for Applied Economists,” Princeton University Press, Princeton, 1992.
[16]  J. J. Laffont and J. Tirole, “A theory of Incentives in Pro- curement and Regulation,” MIT Press, Cam-bridge, 1993.
[17]  A. Atkinson and J. Stiglitz, “Lectures on Public Econom- ics,” McGraw-Hill, New York, 1980.
[18]  E. S. Debaco and P. M. Jorge Neto, “Competi??o Entre os Estados por Investimentos Privados,” Graduate Program in Econom-ics/Federal University of Ceara, Fortaleza, Working Paper No. 180, 1998.
[19]  I. King, R. P. McAfee and L. Welling, “Indus-trial Black- mail: Dynamic Tax Competition and Public In-vestment,” Canadian Journal of Economics, Vol. 26, No. 3, pp. 590- 608, 1993. doi:10.2307/135889

Full-Text

comments powered by Disqus