A race beyond the bottom : the nature of bidding for a firm

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Furusawa, Taiji and Hori, Kazumi and Wooton, Ian (2014) A race beyond the bottom : the nature of bidding for a firm. International Tax and Public Finance, 22 (3). pp. 452-475. ISSN 0927-5940 (https://doi.org/10.1007/s10797-014-9326-z)

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Abstract

We examine how the bidding environment may affect the outcome of tax competition between two countries (or two regions) in attracting a firm’s foreign direct investment (FDI). We compare the equilibrium location choice and payoffs from an English auction, with both complete and incomplete information, relative to those in the traditional setting of a sealed-bid first-price auction. We find that an English auction leads to more aggressive bidding in “race beyond the bottom,” where the nations may bid beyond their own valuations of the FDI. We also discuss the roles of auction protocol and information asymmetry on the auction outcome.

ORCID iDs

Furusawa, Taiji, Hori, Kazumi and Wooton, Ian ORCID logoORCID: https://orcid.org/0000-0001-5084-6379;
  • Item type:Article
    ID code:47604
    Dates:
    Date
    Event
    2014
    Published
    15 May 2014
    Published Online
    15 December 2013
    Accepted
    Notes:The final publication is available at Springer via http://dx.doi.org/10.1007/s10797-014-9326-z
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:23 Apr 2014 10:26
    Last modified:22 Nov 2024 01:08
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/47604
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