%0 Journal Article %A Ferrett, Ben %A Wooton, Ian %D 2016 %T Competing for a duopoly: international trade and tax competition %U https://repository.lboro.ac.uk/articles/journal_contribution/Competing_for_a_duopoly_international_trade_and_tax_competition/9493862 %2 https://repository.lboro.ac.uk/ndownloader/files/17120027 %K untagged %K Economics %K Economics not elsewhere classified %X We analyse the tax/subsidy competition between two potential host governments to attract the plants of firms in a duopolistic industry. While competition between identical countries for a monopolist’s investment is known to result in subsidy inflation,two firms can be taxed in equilibrium with the host countries appropriating the entire social surplus generated within the industry, despite explicit non-cooperation between governments. Trade costs mean that the firms prefer dispersed to co-located production,creating these taxation opportunities for the host countries. We determine the country-size asymmetry that changes the nature of the equilibrium, inducing concentration of production in the larger country. %I Loughborough University