Inter-City Competition for Heterogeneous Creative Class Members Using Tax Policy

Huq, Umana and Batabyal, Amitrajeet (2024): Inter-City Competition for Heterogeneous Creative Class Members Using Tax Policy.

Abstract

We analyze inter-city competition between two cities A and B that use taxes to attract heterogeneous members of the creative class. There are three types of creative class members and each type represents a particular occupation. Irrespective of type or occupation, creative class members value local public goods and each city levies a tax to drawn in as many members of the creative class as possible by providing an apposite local public good. In this setting, we accomplish two tasks. First, we describe the equilibrium allocation, i.e., a tax rate for each city and an allocation of creative class members to the two cities. Second, we compare and contrast this equilibrium allocation with the Pareto efficient allocation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Creative Class, Heterogeneity, Inter-City Competition, Pareto Efficiency, Tax
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; H - Public Economics > H4 - Publicly Provided Goods; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity

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