Country size and tax competition for foreign direct investment

• 成果类型: Article
• 署名作者: Haufler, A; Wooton, I
• 署名单位: University of Konstanz; University of Glasgow; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(98)00055-3
• 发表日期: 1999
• 页码: 121-139
• 关键词: Tax competition; Foreign direct investment; regional location

摘要

We analyse tax competition between two countries of unequal size trying to attract a foreign-owned monopolist. When national governments have only a lump-sum profit tax (subsidy) at their disposal, but face exogenous and identical transport costs for imports, then both countries will be willing to offer a subsidy to the firm. At the same time, the firm prefers to locate in the larger market where it will be able to charge a higher producer price. In equilibrium the large country receives the investment and may even be able to charge a positive tax, if the difference in the sizes of the national markets is sufficiently great. The profit tax paid in equilibrium rises further if countries are given an additional instrument of either a tariff or a consumption tax. (C) 1999 Published by Elsevier Science S.A. All rights reserved.