Fiscal Competition (Varsano, Ferreira e Afonso)

Fiscal competition: a bird’s eye view by Ricardo Varsano, Sergio G. Ferreira and José R. Afonso published by IPEA. “Fiscal competition is a desirable feature insolar as it promotes a better match between local policies and the preferences of residents, and creates an environment for experimentation of different policies, with the best outcomes surviving through a mechanism of natural selection. Furthermore, fiscal competition may prevent overexpansion of government activities. However, in a world where mobility to select and attract firms and individuals through the use of their tax structure and public spending has substantially increased.”