To assemble to resemble? A study of tax disparities among French municipalities

The purpose of this paper is to analyze the effect of inter-municipal cooperation on local taxation. Municipalities that join/create an inter-municipal jurisdiction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the differences in differences method with a quasi-exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal effect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). Moreover, we show that cooperation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities.Inter-municipal cooperation, tax competition, fiscal disparities

Sharing Budgetary Austerity under Free Mobility and Asymmetric Information: An Optimal Regulation Approach to Fiscal Federalism

In the present article, Tiebout meets Laffont and Tirole in the land of Fiscal Federalism. We use a non-trivial Principal-Multi-Agent model to characterize the optimal intergovernmental grant schedule, when the cost of local public goods depends on hidden characteristics and actions of local governments, and under citizen free mobility. We show that local governments earn informational rents, and how optimal local taxes, public good production levels and land prices are jointly distorted at the second-best optimum, as a consequence of free mobility and asymmetric information. The effect of informational asymmetries is to decrease the average production of public goods and to increase the inter-jurisdictional variance of taxes and public-good production.asymmetric information, Principal-Agent model, public budget deficits, free-mobility equilibrium, fiscal federalism

To assemble to resemble? A study of tax disparities among French municipalities

The purpose of this paper is to analyze the effect of inter-municipal cooperation on local taxation. Municipalities that join/create an inter-municipal jurisdiction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the differences in differences method with a quasi-exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal effect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). Moreover, we show that cooperation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities

I. Le partage de la rigueur budgétaire entre l'État et les collectivités locales

Breuillé Marie-Laure. I. Le partage de la rigueur budgétaire entre l'État et les collectivités locales. In: Annuaire des collectivités locales. Tome 28, 2008. Où en est la gestion locale ? pp. 657-668

The challenge of territorial organization

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Marché de droits au déficit et contrainte budgétaire molle

Classification JEL : E61; E62; G14; H6; H7International audienceThis article evaluates the efficiency of a market for tradable deficit permits as a mechanism for implementing budgetary austerity at the local level, when the initial allocation of deficit rights can be manipulated. The way déficit rights are allocated in the market turns out to be decisive for the cost-effectiveness of the System. Indeed, the inability of the State to commit dynamically to an initial allocation of deficit rights generates perverse incentives which affect the efficiency of the local market for tradable deficit permits. It is shown that the decentralized behaviour of local jurisdictions does not lead to the least-cost solution attainable under joint-cost minimization, due to the soft budget constraint problem.Nous envisageons un marché de droits au déficit comme mécanisme de partage de la rigueur budgétaire au niveau local. L’efficacité de ce mécanisme de marché dépend crucialement du caractère manipulable de la règle d’allocation des droits au déficit. En effet, l’incapacité de l’État à s’engager de manière crédible sur une règle d’allocation initiale des droits au déficit est à l’origine d’incitations perverses qui affectent le résultat classique d’égalisation des coûts marginaux de réduction de l’usage de la ressource commune. Nous montrons que le comportement décentralisé des collectivités locales ne conduit pas à la solution de moindre coût, lorsque la contrainte budgétaire est molle

Marché de droits au déficit et contrainte budgétaire molle

National audienceThis article evaluates the efficiency of a market for tradable deficit permits as a mechanism for implementing budgetary austerity at the local level, when the initial allocation of deficit rights can be manipulated. The way déficit rights are allocated in the market turns out to be decisive for the cost-effectiveness of the System. Indeed, the inability of the State to commit dynamically to an initial allocation of deficit rights generates perverse incentives which affect the efficiency of the local market for tradable deficit permits. It is shown that the decentralized behaviour of local jurisdictions does not lead to the least-cost solution attainable under joint-cost minimization, due to the soft budget constraint problem.Nous envisageons un marché de droits au déficit comme mécanisme de partage de la rigueur budgétaire au niveau local. L’efficacité de ce mécanisme de marché dépend crucialement du caractère manipulable de la règle d’allocation des droits au déficit. En effet, l’incapacité de l’État à s’engager de manière crédible sur une règle d’allocation initiale des droits au déficit est à l’origine d’incitations perverses qui affectent le résultat classique d’égalisation des coûts marginaux de réduction de l’usage de la ressource commune. Nous montrons que le comportement décentralisé des collectivités locales ne conduit pas à la solution de moindre coût, lorsque la contrainte budgétaire est molle

Mergers in scal federalism

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The challenge of territorial organization

International audienc