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Local Public Investment and Competition for a Firm

  • Bruno Jullien

    (GREQAM-IDEI)

  • Frederic Rychen

    (GREQAM-IDEP)

  • Antoine Soubeyran

    (GREQAM)

Most of the work in the field of competition between jurisdictions for the attraction of a large plant focuses on financial offers, bids or tax holidays. In this paper we add to the competition game an initial stage in which jurisdictions can invest in an infrastructure capital to enhance their attractiveness and modify the outcome of the competition stage. We characterize the Nash equilibrium of this game. In an example we show how the parameters of the model change the outcome of the game. In particular, the size of a jurisdiction is a powerful attraction force for the firm but it can be bypassed by a well specialized infrastructure capital, even if the competing jurisdiction is big.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1400.

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Date of creation: 01 Aug 2000
Handle: RePEc:ecm:wc2000:1400
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  2. Nadiri, M. Ishaq & Mamuneas, Theofanis P., 1991. "The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of U.S. Manufacturing Industries," Working Papers 91-57, C.V. Starr Center for Applied Economics, New York University.
  3. Berndt, Ernst & Hansson, Bengt, 1992. "Measuring the Contribution of Capital in Sweden," Working Paper Series 365, Research Institute of Industrial Economics.
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  11. Douglas Holtz-Eakin & Mary E. Lovely, 1995. "Scale Economies, Returns to Variety, and the Productivity of Public Infrastructure," NBER Working Papers 5295, National Bureau of Economic Research, Inc.
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  20. Henderson, J V, 1974. "A Note on the Economics of Public Intermediate Inputs," Economica, London School of Economics and Political Science, vol. 41(163), pages 322-27, August.
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  24. Chris Doyle & Sweder Wijnbergen, 1994. "Taxation of foreign multinationals: A sequential bargaining approach to tax holidays," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(3), pages 211-225, October.
  25. Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, vol. 56(1), pages 55-77, January.
  26. Feehan, James P, 1989. "Pareto-Efficiency with Three Varieties of Public Input," Public Finance = Finances publiques, , vol. 44(2), pages 237-48.
  27. Taylor, Leon, 1992. "Infrastructural competition among jurisdictions," Journal of Public Economics, Elsevier, vol. 49(2), pages 241-259, November.
  28. Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
  29. Berndt, Ernst R & Hansson, Bengt, 1992. " Measuring the Contribution of Public Infrastructure Capital in Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 151-168, Supplemen.
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