Strategic Tax Competition; Implications of National Ownership
AbstractTwo jurisdictions compete to capture the rents of a large multinational enterprise (MNE) which invests locally and which is partly owned by local investors. The MNE contributes to local welfare by tax payments and dividends, and it has private information about the efficiency of the operations in the two localisations. It is shown that the distortions in the MNE's real investment portfolio are determined by a trade-off between fiscal externalities and equity externalities, and that investments in the case of strategic tax competition may be lower than in the co-operative case. Ownership matters, and we show how the firm may reduce its overall tax payments by influencing the distribution of owner shares between investors in the two countries.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 281.
Date of creation: 2000
Date of revision:
Tax competition; mobility; common agency;
Other versions of this item:
- Olsen, Trond E. & Osmundsen, Petter, 2001. "Strategic tax competition; implications of national ownership," Journal of Public Economics, Elsevier, vol. 81(2), pages 253-277, August.
- Olsen, T.E. & Osmundsen, P., 1998. "Strategic Tax Competition; Implications of National Ownership," Papers 11/98, Norwegian School of Economics and Business Administration-.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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