Exbrayat, Nelly; Gaigné, Carl; Riou, Stéphane - Institut de Recherche Économique et Sociale (IRES), … - 2009
We build a model of trade and location with two countries which differ with respect to their level of productivity. Public spending has two possible allocations: a direct subsidy to immobile households or a wage subsidy to mobile firms. We show that firms receive a lower net tax subsidy in the...