IDEAS home Printed from https://ideas.repec.org/a/bla/ecopol/v33y2021i2p343-356.html
   My bibliography  Save this article

Market competition, relocation and lobbying

Author

Listed:
  • Vivekananda Mukherjee
  • Amrita Kamalini Bhattacharyya

Abstract

This paper attempts to answer whether market competition makes relocation of a firm to an inefficient location easier through lobbying. It models a case where a larger market is more efficient location choice of the firm. It shows that if the agglomeration effect is not too high, the presence of market competition at its original location makes relocation easier. However, “race to the bottom” competition between the locations fails to take advantage of the market competition; no relocation takes place. The paper shows that instead of lobbying only with the firm, if the legislatures of the smaller market also lobby with legislatures of the larger market, “race to the bottom” is avoided, and the scope for relocation opens. At such an equilibrium, market competition makes relocation to a much smaller market possible.

Suggested Citation

  • Vivekananda Mukherjee & Amrita Kamalini Bhattacharyya, 2021. "Market competition, relocation and lobbying," Economics and Politics, Wiley Blackwell, vol. 33(2), pages 343-356, July.
    • Handle: RePEc:bla:ecopol:v:33:y:2021:i:2:p:343-356
    DOI: 10.1111/ecpo.12174
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecpo.12174
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecpo.12174?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sam Bucovetsky & Michael Smart, 2006. "The Efficiency Consequences of Local Revenue Equalization: Tax Competition and Tax Distortions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 119-144, January.
    2. Brueckner, Jan K., 2011. "Lectures on Urban Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016362, December.
    3. Cailin Slattery & Owen Zidar, 2020. "Evaluating State and Local Business Incentives," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 90-118, Spring.
    4. Holger Sieg & Daniele Coen-Pirani & Jeff Brinkman, 2011. "Agglomeration Externalities and the Dynamics of Firm Location Choices," 2011 Meeting Papers 966, Society for Economic Dynamics.
    5. Thierry Verdier, 2005. "Socially Responsible Trade Integration," Post-Print halshs-00754732, HAL.
    6. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325.
    7. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(2), pages 7-17, Summer.
    8. Cailin Slattery & Owen Zidar, 2020. "Evaluating State and Local Business Tax Incentives," Working Papers 261, Princeton University, Department of Economics, Center for Economic Policy Studies..
    9. Conroy, Tessa & Deller, Steven & Tsvetkova, Alexandra, 2016. "Regional business climate and interstate manufacturing relocation decisions," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 155-168.
    10. Fabien Candau, 2008. "Entrepreneurs' Location Choice And Public Policies: A Survey Of The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 909-952, December.
    11. Moumita Chel & Vivekananda Mukherjee, 2018. "Capital endowment and race to the bottom in a federation," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 12(1), pages 65-82, December.
    12. Fabien Candau, 2008. "Entrepreneurs' Location Choice And Public Policies: A Survey Of The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 909-952, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vivekananda Mukherjee & Paramita Mukherjee & Saheli Bose, 2022. "Extortion, competition among states and private investment in a federation: evidence from Indian manufacturing sector," Economic Change and Restructuring, Springer, vol. 55(2), pages 973-1004, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vivekananda Mukherjee & Paramita Mukherjee & Saheli Bose, 2022. "Extortion, competition among states and private investment in a federation: evidence from Indian manufacturing sector," Economic Change and Restructuring, Springer, vol. 55(2), pages 973-1004, May.
    2. Fabien Candau, 2011. "Heterogeneous Immigration, Segregation and Trade," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 73-86, February.
    3. Andrew Hanson & Shawn Rohlin, 2024. "Local employment multipliers for large publicly subsidized firms: Evidence from a synthetic control approach," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 491-526, March.
    4. Fabien Candau & Jacques Le Cacheux, 2017. "Corporate Income Tax as a Genuine own Resource," Working papers of CATT hal-01847937, HAL.
    5. Raghunandan, Aneesh, 2024. "Government subsidies and corporate misconduct," LSE Research Online Documents on Economics 122855, London School of Economics and Political Science, LSE Library.
    6. Ivanov, Ivan T. & Zimmermann, Tom, 2024. "The “Privatization” of municipal debt," Journal of Public Economics, Elsevier, vol. 237(C).
    7. Siegloch, Sebastian & Wehrhöfer, Nils & Etzel, Tobias, 2021. "Direct, Spillover and Welfare Effects of Regional Firm Subsidies," CEPR Discussion Papers 16129, C.E.P.R. Discussion Papers.
    8. Mitchell, Matt & Farren, Michael & Gonzalez, Olivia & Horpedahl, Jeremy, 2019. "The Economics of a Targeted Economic Development Subsidy," Annals of Computational Economics, George Mason University, Mercatus Center, November.
    9. Robinson, Sarah & Tazhitdinova, Alisa, 2025. "One hundred years of U.S. state taxation," Journal of Public Economics, Elsevier, vol. 241(C).
    10. Timothy J. Bartik, 2020. "Targeting Jobs Toward The People Who Need Them," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(3), pages 854-857, June.
    11. Aneesh Raghunandan, 2024. "Government Subsidies and Corporate Misconduct," Journal of Accounting Research, Wiley Blackwell, vol. 62(4), pages 1449-1496, September.
    12. repec:rre:publsh:v:53:y:2023:i:2 is not listed on IDEAS
    13. Tian, Binbin & Lin, Chao & Zhang, Wenwen & Feng, Chen, 2022. "Tax Incentives, On-the-job Training, and Human Capital Accumulation: Evidence from China," China Economic Review, Elsevier, vol. 75(C).
    14. Ole Agersnap & Owen Zidar, 2021. "The Tax Elasticity of Capital Gains and Revenue-Maximizing Rates," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 399-416, December.
    15. Fabien Candau, 2011. "Is Agglomeration Desirable?," Annals of Economics and Statistics, GENES, issue 101-102, pages 203-227.
    16. Bhardwaj,Abhishek & Ghose,Devaki & Mukherjee,Saptarshi & Singh,Manpreet, 2022. "Million Dollar Plants and Retail Prices," Policy Research Working Paper Series 9995, The World Bank.
    17. Ricardo Dahis & Christiane Szerman, 2023. "Decentralizing Development: Evidence from Government Splits," Monash Economics Working Papers 2023-18, Monash University, Department of Economics.
    18. Chad P. Bown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection along Supply Chains," CESifo Working Paper Series 8812, CESifo.
    19. Syle Krasniqi & Nagip Skenderi, 2025. "Unveiling National Competitiveness: Drivers and Impacts on Productivity," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 3-21.
    20. Duan, Huiqiong & Rogers, Cynthia & Wang, Jia & Yuan, Weici, 2024. "Do big shifts in economic development incentives attract people?," Economics Letters, Elsevier, vol. 234(C).
    21. Akira, Yamaguchi, 2024. "The impact of news shock of the openings or expansions of large-scale semiconductor plants on local labour market in Japan," Japan and the World Economy, Elsevier, vol. 72(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecopol:v:33:y:2021:i:2:p:343-356. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0954-1985 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.