Article Abstract:
Extensive empirical studies using aggregate data have been conducted to examine the productivity of regional or local public goods. This empirical literature was analyzed in terms of regional economics theory. In addition, this investigation explored the relationship of the contribution of public goods to equilibrium aggregate output to its role in the production functions of firms. This study posits that earlier aggregate production function analyses have failed to fully determine the role of public goods in production because they have not incorporated the complex set of price effects which determine the relationship between public goods and aggregate output. They may only give rise to unreliable conclusions regarding the role of infrastructure on productivity growth and the social-welfare implications of public investments.
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Article Abstract:
An extension of tax competition research was performed through the formulation of a tax competition model that considers two different types of mobile capital available for taxation. In this model, the economy is composed of two or more jurisdictions, each of which produces a single homogeneous good. The production technology employs two types of mobile capital as variable inputs and treats land as an immobile factor that is fixed in local supply. This extension suggests that differential tax treatment of different types of firms is beneficial because it improves welfare. Optimal tax rules were obtained and the possibility of localities subsidizing one type of capital was established.
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Article Abstract:
A hypothetical debate is introduced; according to which money invested in highway development boosts productivity, and provides overall transportation benefits that reduce a firm's stock level. However, it is found that actual annual returns from highway investments dropped during the 1980s and 1990s, partly due to huge investments in the implementation of unproductive transportation schemes.
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