Free entry and regulatory competition in a global economy

• 成果类型: Article
• 署名作者: Miyagiwa, Kaz; Sato, Yasuhiro
• 署名单位: State University System of Florida; Florida International University; University of Osaka
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2014.06.005
• 发表日期: 2014
• 页码: 1-14
• 关键词: Entry policy; Excessive entry; GLOBALIZATION; Regulatory competition

摘要

This paper examines the optimal entry policy toward oligopoly in a global economy. We show that free entry results in too much competition for the world, but each country's corrective tax policy, unless internationally coordinated, proves suboptimal because of international policy spillovers. Thus, globalization prevents countries from pursuing the optimal entry policy. However, globalization also generates the gains from trade. When countries are small, the gains from trade dominate the losses from a suboptimal entry policy, but as markets grow the result is reversed, making trade inferior to autarky. Therefore, the need for tax harmonization grows as the world economy grows. This paper also contributes to the international tax competition literature through the discovery of the reverse home market effect. (C) 2014 Elsevier B.V. All rights reserved.