Faculty of Economics and Business Administration Publications Database

Public Procurement in the Presence of Capital Taxation

Volume: 31
Number: 2/3
Pages: 339 - 353
Month: 4
ISSN-Print: 0166-0462
Year: 2001
Keywords: Procurement; Tax competition; Federalism
Abstract: The paper considers governments'' public procurement decision as a way of influencing industry structure. In a federation in which capital is mobile and capital taxation is harmonized, a home bias in public procurement can potentially be explained as an effort to increase the capital intensity of local production and to attract taxable capital. As a result, governments may prefer domestic firms to more efficient foreign firms.