Competing for Foreign Direct Investments: A Real Options Approach
AbstractThis paper uses the Bad News Principle to study how the ability of multinationals to shift profits by transfer pricing affects both the timing of foreign direct investment decisions and government tax policy. A main finding of the paper is that if countries compete to attract foreign direct investments, only weak conditions are needed to establish that welfare is higher when firms can postpone irreversible investments as opposed to when they cannot.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 929.
Date of creation: 2003
Date of revision:
corporate taxation; irreversibility; MNE; real options and uncertainty;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
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