Fiscal competition for FDI when bidding is costly

Ferrett, Ben and Wooton, Ian (2013) Fiscal competition for FDI when bidding is costly. Economics Bulletin, 33 (3). pp. 2202-2208. ISSN 1545-2921

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    Abstract

    We introduce bidding costs into a standard model of tax/subsidy competition between two potential host countries to attract the plant of a monopoly firm. Such a bidding cost, even if it is infinitesimal, qualitatively alters the resulting equilibrium. At most one country offers fiscal inducements to the firm, and this attenuates the familiar "race to the bottom" in corporate taxes. In general, the successful host country benefits from the resulting absence of active tax/subsidy competition, at the expense of the owners of the firm in the rest of the world.

    Creators(s): Ferrett, Ben and Wooton, Ian ORCID logoORCID: https://orcid.org/0000-0001-5084-6379;
    Item type:Article
    ID code:46401
    Keywords:fiscal competition, FDI , bidding is costly, bidding cost, race to the bottom, tax/subsidy competition, foreign direct investment, Regional economics. Space in economics, Economics, Econometrics and Finance(all)
    Subjects:Social Sciences > Communities. Classes. Races > Regional economics. Space in economics
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:06 Jan 2014 16:39
    Last modified:01 Jan 2021 10:44
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/46401
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