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Government policy towards multi-national corporations

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Author Info
David Wettstein () (Ben-Gurion University of the Negev)
Israel Luski () (Ben-Gurion University of the Negev)
Todd Kaplan () (University of Exeter)

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Abstract

We analyze an environment with asymmetric information where a country tries to attract a multi-national corporation. The country can use both taxes and grants to meet its objective of maximizing net revenues. We show that when the country has private information it can often convey it via its choice of a tax-grant pair. When the tax rates are unbounded the country is able to extract the full surplus. The existence of an upper bound can in some cases reduce the payoff to a stronger country.

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File URL: http://www.accessecon.com/pubs/EB/2003/Volume6/EB-02F00002A.pdf
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Publisher Info
Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 6 (2003)
Issue (Month): 3 ()
Pages: 1-8
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:6:y:2003:i:3:p:1-8

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Related research
Keywords: Foreign Direct Investment;

Find related papers by JEL classification:
F0 - International Economics - - General
F2 - International Economics - - International Factor Movements and International Business

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This page was last updated on 2010-1-6.

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