Urban Industrial Tax Subsidies: A Noncooperative Equilibrium Approach
Regional Science and Urban Economics
This paper provides a model of firm and city governmental behavior which predicts tax subsidies to firms as a result of non-cooperative equilibrium behavior on the part of both firms and the government. The total amount of subsidies given in this non-cooperative equilibrium is greater than the subsidies which would be offered if urban governments acted cooperatively. The model has four-stage sequential decision making with the behavior of the urban government modeled as the hierarchal actions of a city council and a community development agency. The non-cooperative equilibrium in the model is a four-stage perfect equilibrium.
Hands, D. Wade, and Bruce D. Mann. "Urban industrial tax subsidies: A non-cooperative equilibrium approach." Regional Science and Urban Economics 17.2 (1987): 179-190.