Many authors demonstrate that the tax gap resulting from tax competition increases with the size asymmetry of the competing countries. Consequently, increasing country-size disparities exacerbates the inefficiency of tax competition. The aim of this note is to show that this classical view has...

When capital is sunk after it is invested, a host government facing heterogeneous foreign investors has a strong incentive to reduce preferential taxes over time in order to attract less eager investors while fully expropriating past investors. This induces investors to wait rather than invest...

A multinational firm’s location decision depends not only on the host country’s tax and trade policies. Another country can use trade policy to influence the firm’s location decision. When countries form a free trade agreement (FTA), FDI destruction is possible.

In this short note we extend the home attachment setting of Mansoorian and Myers (1993) and Ogura (2006) to allow the study of tax competition in a dynamic framework when international business relocation occurs over successive periods. The dynamic framework we propose also helps to understand...

This paper investigates the impacts of competition structures on firms’ incentives for adopting strategic environmental corporate social responsibility (ECSR) certified by a Non-Governmental Organization. We show that, to induce firms to adopt certified ECSR, the certifier will set a standard...

This paper sets up a three-stage (R&D, technology licensing, and output) oligopoly game in which only one of the firms undertakes a cost-reducing R&D and may license the developed technology to the others by means of a two-part tariff (i.e., a per-unit royalty and an upfront fee) contract. It is...

In the context of a seller with private information about product quality, I show that revelation of information on product quality is sometimes, but not always, socially valuable. When it is socially valuable, there is generally a tradeoff between the acquisition and revelation of finer, but...

According to Chang et al. (2013), social welfare under licensing is lower than under no-licensing if the R&D efficiency is high. We show that this result is not correct, as when R&D efficiency is high social welfare is higher under licensing than under no-licensing.

This note provides a novel argument why countries may have incentives to allow for some profit shifting to low-tax jurisdictions. The reason is that a tightening of transfer pricing policies by high-tax countries may lead to more aggressive tax rate competition by low-tax countries.

An increase in the taxation of foreign affiliates reduces domestic investment, as has recently been empirically shown in Becker and Riedel (2012). This paper investigates the implication of this finding for tax competition. It is shown that an increase in the number of multinational firms (in...