SANDLER and SHELTON [6] recently made a significant contribution to the theory of benefit spillovers in a setting of local governments. Unlike previous authors [1, 2, 3, 7], they have integrated this theory with the possibility of tax exportation. Their analysis allows them to derive certain predictions about the effect of tax exporting on the levels of public good production in both the tax exporting and the tax importing jurisdictions.
This paper does not question the fruitfulness of their approach. It does, however, argue that if different and, perhaps, more realistic assumptions are made about the connection between tax spillouts and the level of public goods actually chosen, then their predictions about the effects on public good output levels may not be valid. Section 1 reiterates the relevant portion of the SANDLER-SHELTON argument. Section 2 presents an alternate formulation. [ABSTRACT FROM AUTHOR]