Abstract: This paper studies the existence and implications of fiscal competition and coordination. We first present a simple model of asymmetric fiscal competition where rent-maximizing jurisdictions compete for mobile labor. The model predicts that under fiscal competition, the less productive jurisdictions would provide a higher level of public good (“tame Leviathan”) and have a lower level of population outflow (under migration); as compared to under fiscal coordination where a social planner makes a joint decision for multiple jurisdictions. In a novel empirical setting created by the combination of two national programs in China, the “Rural School Consolidation” program and the “Special Economic Zones (SEZs)” program, spatially adjacent townships have discontinuous incentives to compete\coordinate with a neighboring SEZ. We exploit such quasi-experimental variation using a spatial discontinuity design, and find that those townships who compete with a SEZ provide more primary schools and have a lower level of population outflow, as compared to those who coordinate, consistent with our theoretical propositions. Further analyses check for robustness, explore for heterogeneity, and rule out alternative explanations.