Targeting FDI

Ferrett, Ben and Wooton, Ian (2021) Targeting FDI. International Tax and Public Finance, 28 (2). pp. 366-385. ISSN 0927-5940 (https://doi.org/10.1007/s10797-020-09628-z)

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Abstract

We study the tax/subsidy competition between two countries to attract the FDI projects of two firms. We assume that governments lack the capacity to target every potential inward investor such that each can only bid for a single firm. When the characteristics of the two countries are common knowledge, subsidy competition never arises in equilibrium. Both governments may target the same firm if there is uncertainty as to the more profitable location for that firm’s plant, such that both governments believe they may win the competition. We also explore how such uncertainty affects the firms' after-tax profits.

  • Item type:Article
    ID code:73741
    Dates:
    Date
    Event
    April 2021
    Published
    19 September 2020
    Published Online
    8 August 2020
    Accepted
    Subjects:Social Sciences > Finance
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:28 Aug 2020 15:39
    Last modified:18 Apr 2024 00:27
    URI:https://strathprints.strath.ac.uk/id/eprint/73741
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