A dynamic model of intergovernmental competition for a large plant is presented, when local productivity is uncertain. One firm determines the location of its plant in each period by conducting an auction, soliciting bids from local governments. Equilibrium subsidies from the local governments are derived. The author also consider a two-stage game where local governments first choose a level of costly infrastructure then participate in the sequential auction. Even when costs are identical across locations, investing in different levels of infrastructure is a Nash equilibrium. Moreover, when infrastructure is endogenous in this manner, it is chosen efficiently.
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Volume (Year): 26 (1993) Issue (Month): 3 (August) Pages: 590-608 Download reference. The following formats are available: HTML
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Benoit Julien & John Kennes & Ian King, 2000.
"Bidding for Labor,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
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Julien, B. & Kennes, J. & King, I., 1998.
"Bidding for Labour,"
Discussion Papers
dp98-03, Department of Economics, Simon Fraser University.
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