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.
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Item type: Article ID code: 46401 Dates: DateEvent29 August 2013PublishedSubjects: 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: 12 Aug 2024 00:41 Related URLs: URI: https://strathprints.strath.ac.uk/id/eprint/46401
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