EB with Ian 2013 published version.pdf (322.75 kB)
Fiscal competition for FDI when bidding is costly
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.
History
School
- Business and Economics
Department
- Economics
Published in
Economics Bulletin, 2013, vol. 33, issue 3, pages 2202-2208Volume
33Issue
3Pages
2202 - 2208 (7)Citation
FERRETT, B. and WOOTON, I., 2013. Fiscal competition for FDI when bidding is costly. Economics Bulletin, 33 (3), pp.2202-2208.Publisher
Economics BulletinVersion
- VoR (Version of Record)
Publisher statement
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/Publication date
2013ISSN
1545-2921Publisher version
Language
- en