LEVIATHAN AND COMPETITION AMONG JURISDICTIONS - THE CASE OF BENEFIT TAXATION

This paper shows that intejurisdictional competition for mobile factor s of production forces the government to raise the efficiency of the p ublic sector and, thus, helps to tame Leviathan governments. However, this result is derived under some restrictive assumptions concerning t he kind of tax policy used by the government. In the case of benefit t axes, e.g., user charges, a Leviathan may be tamed by intejurisdiction al competition, whereas this is not necessarily true in the case of lu m-sum taxes. (C) 1998 Academic Press.