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Contextual variation in interdependent policy making: The case of tax competition
Author(s) -
Wasserfallen Fabio
Publication year - 2014
Publication title -
european journal of political research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.267
H-Index - 95
eISSN - 1475-6765
pISSN - 0304-4130
DOI - 10.1111/1475-6765.12058
Subject(s) - interdependence , variation (astronomy) , competitor analysis , context (archaeology) , competition (biology) , public economics , preference , economics , empirical evidence , context analysis , policy making , economic geography , microeconomics , political science , government (linguistics) , geography , physics , management , archaeology , epistemology , astrophysics , law , biology , ecology , philosophy , linguistics
Many studies show that policy makers react to the policy choices made in other jurisdictions, but we still know relatively little about the factors driving interdependent policy making, especially about how context shapes interdependence. Theoretical arguments suggest that contextual factors, such as stable institutions and geographic location, explain variation in interdependence. However, there is a lack of empirical research investigating contextual heterogeneity in interdependent policy making, mainly because it cannot be analysed with standard spatial econometric methods. This article introduces multilevel modeling that allows the study of contextual variation in interdependence and illustrates the method with the analysis of uneven tax competition in S witzerland. The findings of fine‐grained data show that cantonal governments compete more strongly with their competitors the closer a unit is located to a metropolis with comprehensive public good provision. The analysis demonstrates that we can better understand the mechanisms of interdependent policy making by studying its contextual drivers.