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Tax competition and the international distribution of firm ownership : an invariance result

Ferrett, B. and Wooton, I. (2010) Tax competition and the international distribution of firm ownership : an invariance result. International Tax and Public Finance, 17 (5). pp. 518-531. ISSN 0927-5940

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    Abstract

    How does the international distribution of firm ownership affect the outcomes of tax/subsidy competition for mobile plants? As corporate ownership becomes increasingly globalised, this question becomes increasingly important for policy. We prove a strong invariance result in the context of the tax/subsidy competition between two host countries for a monopoly firm's plant. Both the equilibrium plant location and the equilibrium tax/subsidy offers are independent of the international distribution of the firm's ownership. The reason is that the tax/subsidy competition equalises the firm's post-tax profits across countries, making owners of capital indifferent towards the location of production.

    Item type: Article
    ID code: 15336
    Keywords: tax/subsidy competition, foreign direct investment, international distribution, firm ownership, Economic Theory
    Subjects: Social Sciences > Economic Theory
    Department: Strathclyde Business School > Economics
    Related URLs:
      Depositing user: Mrs Kirsty Fontanella
      Date Deposited: 07 Feb 2010 16:27
      Last modified: 19 Feb 2013 07:26
      URI: http://strathprints.strath.ac.uk/id/eprint/15336

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