Tax competition for a mobile factor is different in ‘new economic geography settings’ compared to standard tax competition models. The agglomeration rent which accrues to the mobile factor in the core region can be taxed. Moreover, a tax differential between the core and the periphery can be maintained. The present paper reexamines this issue in a setting which, in addition to the core-peripher...

Taxpayers are more compliant than the traditional economic models predict. Why? The literature calls it the “puzzle of tax compliance”. In this paper we use field, experimental and survey data to investigate the empirical evidence on whether presence of tax morale helps to resolve this puzzle. The results reveal a strong correlation between tax morale and tax evasion/compliance which confirms t...

Article history: Received 18 March 2009 Received in revised form 11 September 2009 Accepted 2 March 2010 Available online 7 March 2010 JEL classifications: C92 D03 H41

This paper studies the mechanism design problem for the class of Bayesian environments where agents do care for the well-being of others. For these environments, we fully characterize interim efficient mechanisms and examine their properties. This set of mechanisms is compelling, since interim efficient mechanisms are the best in the sense that there is no other mechanism which generates unanim...

We consider a self-administered organization characterized by a principal elected by the agents and establish conditions under which self-administration leads to either stronger or weaker incentives than an organization which only pursues exogenous objectives such as profit maximization. While the output of the organization that accrues to society is controlled by the effort of the agents and b...

Under incomplete information about (independent) private valuations of a public good, we establish sufficient conditions under which, despite the incentive to free ride on future contributors, the expected total amount of voluntary contributions is higher when agents contribute sequentially (observing prior contributions) rather than simultaneously. We establish this in a conventional framework...

This paper examines whether decentralization increases the responsiveness of public investment to local needs using a unique database from Bolivia. Empirical tests show that investment patterns in human capital and social services changed significantly after decentralization. These changes are strongly and positively related to objective indicators of need. Nationally, these changes were driven...

Empirical evidence is provided for the importance of pro-social behavior of individuals in an anonymous, n-person public good setting. A unique panel data set of 136,000 observations is matched with an extensive survey. Even under anonymous conditions, a large number of individuals are prepared to donate quite a significant sum of money. Cooperation conditional on giving by specific other perso...

Most professional economists believe that economist in general are more selfish than other persons and that this greater selfishness is due to economic education. In this paper we offer empirical evidence against this widely held belief. Using a unique data set about giving behaviour to two social funds at the University of Zurich, it is shown that economic training does not make people act mor...

Applying a willingness to pay approach known from contingent valuation in environmental economics, we develop an ordinally based measure for the size of individual sacrifice that is connected with an agent's contribution to a public good. We construct a selection mechanism that picks the unique efficient solution among all allocations that have an equal sacrifice as defined in this way. We show...