This paper addresses the role that foreign vs. domestic ownership of companies plays for governments in asymmetric countries' competition for a multinational's subsidiary. I argue that equilibrium subsidies as well as a foreign investor's location decision in policy competition between these countries critically depend on the ownership structure of incumbent firms. This shows that small countries with few national incumbents in an industry may be successful in attracting multinationals.
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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number
2031.
Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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