IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_316.html
   My bibliography  Save this paper

International Competition for R&D Investments (new title: Spillovers and international competition for investments)

Author

Listed:
  • Trond Olsen
  • Petter Osmundsen

Abstract

Two jurisdictions compete to attract shares of the R&D investment budget of a large multinational enterprise, whose investments potentially confer positive spillovers on national firms. The firm contributes to local welfare by these spillovers (should they materialize), by tax payments and by dividends paid to local investors. The firm has private information both about its efficiency and about spillovers, and in particular whether the latter do exist or not. It is shown that strategic tax competition may lead to overinvestments relative to the first-best allocation, that the excessive investments occur in the country where the positive spillover effects are lowest, and that they are most severe for the least efficient firms.

Suggested Citation

  • Trond Olsen & Petter Osmundsen, 2000. "International Competition for R&D Investments (new title: Spillovers and international competition for investments)," CESifo Working Paper Series 316, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_316
    as

    Download full text from publisher

    File URL: http://www.cesifo-group.de/DocDL/cesifo_wp316.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bond, Eric W. & Gresik, Thomas A., 1996. "Regulation of multinational firms with two active governments: A common agency approach," Journal of Public Economics, Elsevier, vol. 59(1), pages 33-53, January.
    2. 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.
    3. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    4. Martimort, David, 1996. "The multiprincipal nature of government," European Economic Review, Elsevier, vol. 40(3-5), pages 673-685, April.
    5. Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-1372, September.
    6. Biglaiser Gary & Mezzetti Claudio, 1993. "Principals Competing for an Agent in the Presence of Adverse Selection and Moral Hazard," Journal of Economic Theory, Elsevier, vol. 61(2), pages 302-330, December.
    7. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    8. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
    9. Michael Devereux & Harold Freeman, 1995. "The impact of tax on foreign direct investment: Empirical evidence and the implications for tax integration schemes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 85-106, February.
    10. Trond E. Olsen, 1993. "Regulation of Multiagent Research and Development," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 529-541, Winter.
    11. Haaparanta, Pertti, 1996. "Competition for foreign direct investments," Journal of Public Economics, Elsevier, vol. 63(1), pages 141-153, December.
    12. Osmundsen, P. & Hagen, K. P. & Schjelderup, G., 1998. "Internationally mobile firms and tax policy1," Journal of International Economics, Elsevier, vol. 45(1), pages 97-113, June.
    13. Olsen, T.E. & Osmundsen, P., 1999. "Common Agency with Outside Options; the Case of International Taxation of an MNE," Norway; Department of Economics, University of Bergen 1999, Department of Economics, University of Bergen.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Tax competition; R&D; common agency;

    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:ces:ceswps:_316. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.