The Economics of Fiscal Competition

The monograph attempts to answer to crucial questions of the essence of the confluence of local public finance and corporate finance. Why local authori ties are ready to compete for limited and mobile source of taxation? How distinguish and what determine their ability and propensity to compete? What make local jurisdiction attractive for business location? And how localisation of business is related to both liquidity and profitability of firm? Because of the problem in question is twofold, the monograph is comprised of two complementary parts. First part has been dedicated to fiscal federalism, the chapters of second part are for business localisation.

PREFACE 7 Part 1. FISCAL FEDERALISM (Artur Walasik) 1. Theoretical models of fiscal decentralisation. The ability to fiscal competition 13 2. Economics of decentralisation. The propensity to fiscal competition 20 3. Economic and demographic sensitivity of local finance. Theory and empirics of the density of taxation 28 4. Conjunction of corporate finance and local budget 41 Part 2. BUSINESS ACTIVITY (Jolanta Gałuszka) 5. Theory of business localisation. The geography of corporate finance 53 6. The impact of taxes on corporate liquidity 72 7. Profitability as the source of tax competition 86 CONCLUSIONS 99 BIBLIOGRAPHY 103 LIST OF FIGURES 121 LIST OF TABLES 122