در اثر تحرک پذیری سرمایه در سیاست های زیربنایی محلی و رانتخواری

This paper deals with the influence of capital mobility on local infrastructure policy and on rent-seeking activities of local interest groups. It employs a model where households differ with respect to their endowments with the immobile factor land. Local governments decide about the level of productive infrastructure in their jurisdiction. According to their land endowments, different households benefit to a different degree from infrastructure. This redistribution effect of local infrastructure gives households an incentive for rent-seeking. As this paper shows, capital mobility and fiscal competition between local governments have an influence on the equilibrium level of rent-seeking. Rent-seeking expenditures increase with the introduction of capital mobility in a broad class of cases.

In this paper a political economy model is set up to analyse the influence of capital mobility on local infrastructure policy and on rent-seeking of interest groups. Infrastructure is modelled as a local public intermediate input. Examples for this kind of infrastructure are local transport and communication facilities or public administration services. These inputs raise the productivity of private factors in the jurisdiction where they are supplied and thereby cause an increase in factor incomes. According to their factor endowments, different households benefit to a different degree from this increase in factor incomes. This paper deals with the case where households differ with respect to their endowments with the immobile factor land. Households owning much land then derive high benefits from an increase in the infrastructure level compared to households owning less land or no land at all in the jurisdiction. In such a setting, households have an incentive for rent-seeking: Land-abundant households seek to influence the local government for an increase in the level of infrastructure; land-poor households seek to influence the government in the opposite direction. Rent-seeking is analysed in this paper in a simple model of political equilibrium. The government is assumed to maximise the weighted aggregate welfare of land-abundant and land-poor households. The respective weight of each household group is determined by its rent-seeking expenditures. If the interest groups of land-abundant and land-poor households are symmetric and both exert the same rent-seeking pressure, then the local government does not redistribute in favour of one group. Infrastructure is then provided on a level that maximises aggregate net factor income in the jurisdiction, and the marginal productivity of infrastructure is equal to its marginal costs. The equilibrium infrastructure level exceeds the income maximising level, if the group of land-abundant households exerts a higher political pressure than the group of land-poor households, whereas the infrastructure level is below the income maximising level, if land-poor households exert a relatively higher political pressure. As this paper shows, capital mobility influences the distribution effects of local infrastructure policy and rent-seeking activities of local interest groups. With capital mobility, an improvement of local infrastructure attracts mobile capital from other jurisdictions. On the one hand, this capital influx raises the land rent. On the other hand, local infrastructure has a smaller influence on the capital income in an open jurisdiction compared to a closed jurisdiction. In other words, the incidence of local infrastructure policy is shifted from the mobile factor capital to the immobile factor land. With unequally distributed land, the redistribution effects of local infrastructure policy increase with the introduction of capital mobility, whereas the marginal influence on aggregate income remains unchanged. In the case of symmetric rent-seeking, the local government does not consider the redistribution effects, and infrastructure is supplied on the same level as in the closed jurisdiction. However, the marginal benefits of rent-seeking increase with the introduction of capital mobility. The interest groups therefore expand their rent-seeking activities to a new symmetric equilibrium with higher rent-seeking expenditures. In addition to the case of symmetric rent-seeking, the paper also considers asymmetric rent-seeking with rent-seeking by only one of the interest groups and with redistribution in favour of this group. For a given level of rent-seeking, the infrastructure level in an open jurisdiction then differs from the infrastructure level in a closed jurisdiction. If the local government redistributes in favour of land-abundant households, the infrastructure level increases with the introduction of capital mobility. If the local government redistributes in favour of the land-poor households, the infrastructure level declines. The change in the infrastructure level also influences the marginal benefit of rent-seeking. This paper shows that the marginal benefit of rent-seeking increases with the infrastructure level. With asymmetric rent-seeking, two effects therefore determine the influence of capital mobility on the equilibrium level of rent-seeking: On the one hand, for a given infrastructure level the marginal benefit of rent-seeking increases. On the other hand, the infrastructure level changes. With redistribution in favour of land-abundant households, both effects cause an increase in rent-seeking. With redistribution in favour of land-poor households, both effects work in opposite directions, and the equilibrium level of rent-seeking in the open jurisdiction may in general be higher or lower than in the closed jurisdiction. However, a sufficient condition is derived for which rent-seeking increases with the introduction of capital mobility also in this case. Related literature on non-cooperative infrastructure policy with interregional capital mobility can be basically divided into two groups of models. In the first group infrastructure policy is used to influence the price of the mobile capital strategically, comparable to an optimum tariff (see Devereux, 1987, or Anwar, 1992). A capital-exporting jurisdiction raises its supplied quantity of infrastructure above the cooperative level to increase the price of capital. A capital-importing jurisdiction instead chooses an infrastructure level below the cooperative level. Such a strategic infrastructure policy is inefficient from a global point of view, as the equilibrium infrastructure levels deviate from the Pareto-optimum. Rauscher (1993) introduces rent-seeking in this setting. He shows that a political bias in favour of certain interest groups caused by rent-seeking might correct this inefficiency. Rauscher (1993) does not derive equilibrium rent-seeking expenditures in his model. The second group of models investigates whether tax competition between jurisdictions may result in an inefficient provision of local infrastructure.1 As Zodrow and Mieszkowski, 1986 and Gerber and Hewitt, 1987 or recently Matsumoto (1998) have shown, infrastructure may be provided at an inefficiently low level, if it has to be financed entirely with a source-based tax on the mobile factor capital.2 This underprovision result can be explained with an externality resulting from the source-based tax on capital (see also Wildasin, 1989): A unilateral increase in the capital tax rate causes capital outflows to other jurisdictions. This has a positive effect on the tax base and the level of infrastructure provided in other jurisdictions. Since the local government does not consider the positive externality, the equilibrium tax rate and the provided infrastructure level are inefficiently low. The effects of capital mobility on rent-seeking are not considered in these tax-competition models. To focus on the redistribution effects of infrastructure policy, this paper excludes optimum-tariff incentives for strategic infrastructure policy by assuming symmetric small open jurisdictions. The paper also does not consider the tax competition influence on local infrastructure policy by assuming a non-distortionary, residence-based income tax to finance local infrastructure provision. Capital mobility then influences local infrastructure policy, because it changes the redistribution effects of infrastructure policy. The effects of capital mobility on redistribution policy have also been analysed by Persson and Tabellini (1992). In their paper local governments do not provide infrastructure, but instead raise a capital tax to redistribute between households with a high capital endowment and households with a low capital endowment. Lorz (1998) introduces interest group lobbying into the analysis of redistributive capital taxes and shows that lobbying for redistributive capital taxes declines with the introduction of capital mobility. The set-up in this paper differs from Persson and Tabellini (1992) and Lorz (1998) not only with respect to the policy instruments available, infrastructure policy versus capital taxes, but also with respect to the underlying redistribution conflict. In this paper, households differ with respect to their endowment with the immobile factor; in the papers on redistributive capital taxes households differ with respect to their endowment with the mobile factor. To compare both settings, Section 5 of this paper allows for an unequal distribution of the mobile factor capital as well as of the immobile factor land. It is shown that rent-seeking increases in the symmetric equilibrium, if the group that benefits from an increase in infrastructure is land-abundant not only in absolute terms of land endowment per capita but also in relative terms of land endowment per unit of capital endowment. The equilibrium infrastructure levels and the equilibrium rent-seeking expenditures are derived in this paper for a closed jurisdiction and for a small open jurisdiction with perfect capital mobility. A comparison of these two equilibria shows the influence of capital mobility on rent-seeking and on the level of infrastructure. The structure of the paper is as follows: In Section 2 the model is set up, and the equilibrium is derived for a closed jurisdiction. In Section 3 the closed jurisdiction equilibrium is compared to the open jurisdiction equilibrium for the case of symmetric rent-seeking. Section 4 deals with asymmetric rent-seeking. In Section 5 land as well as the mobile factor are assumed to be unequally distributed. Section 6 concludes.