Fiscal Competition for FDI when Bidding is Costly
We introduce bidding costs into a standard model of tax/subsidy competition between two potential host countries to attract a monopoly firm’s plant. Such a bidding cost, even if it is infinitesimal, qualitatively alters the resulting equilibrium. At most one country offers fiscal inducements to the firm, and this attenuates the “familiar race to the bottom” in corporate taxes. In general, the successful host country benefits from the resulting absence of active tax/subsidy competition, at the expense of the firm’s owners in the rest of the world.
|Date of creation:||Jun 2013|
|Date of revision:||Jun 2013|
|Contact details of provider:|| Postal: Loughborough, Leicestershire, LE11 3TU|
Phone: +44 (0) 1509 222701
Fax: +44 (0) 1509 223910
Web page: http://www.lboro.ac.uk/departments/sbe/research/economics/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Haufler, Andreas & Wooton, Ian, 1999.
"Country size and tax competition for foreign direct investment,"
Journal of Public Economics,
Elsevier, vol. 71(1), pages 121-139, January.
- Haufler, Andreas & Wooton, Ian, 1999. "Country size and tax competition for foreign direct investment," Munich Reprints in Economics 20408, University of Munich, Department of Economics.
- Andreas Haufler & Ian Wooton, . "Country Size and Tax Competition for Foreign Direct Investment," Working Papers 9702, Business School - Economics, University of Glasgow.
- Joseph E. Stiglitz, 1987. "Technological Change, Sunk Costs, and Competition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 883-947.
- Ben Ferrett & Ian Wooton, 2010.
"Tax competition and the international distribution of firm ownership: an invariance result,"
International Tax and Public Finance,
Springer, vol. 17(5), pages 518-531, October.
- Ferrett, Ben & Wooton, Ian, 2006. "Tax Competition and the International Distribution of Firm Ownership: An Invariance Result," CEPR Discussion Papers 5984, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:lbo:lbowps:2013_04. 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: (Huw Edwards)
If references are entirely missing, you can add them using this form.