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We show that the static duopoly model in which firms choose between exporting and foreign direct investment is often a prisoners' dilemma game in which a switch from exporting to foreign direct investment reduces profits. By contrast, we show that when the game is repeated there is a range of...
Persistent link: https://www.econbiz.de/10010903800
We analyze tax competition between two countries of unequal size trying to attract a foreign-owned monopolist. When regional 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 always...
Persistent link: https://www.econbiz.de/10010958339
This investigation pits Cournot oligopolists against each other in a model of quality and R&D choice. A firm gains a strategic advantage over its rival when it is able to sell in more countries due to the jointness of quality improvements across production locations. Trade barriers that restrict...
Persistent link: https://www.econbiz.de/10005824190
This paper analyses tax competition between two countries of unequal size trying to attract a foreign-owned monopolist. When regional 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...
Persistent link: https://www.econbiz.de/10005136406
In this chapter I explain an innovative modeling approach that incorporates services, foreign direct investment (FDI) and endogenous productivity effects from services. I begin with a small stylized model to help understand the fundamental economics. The model shows that services liberalization...
Persistent link: https://www.econbiz.de/10010719531
I characterize the optimal unilateral trade policy for domestic firms competing in domestic or integrated markets with endogenous entry of foreign firms. Under conditions satisfied in most trade models (as with quasi-linear or Dixit-Stiglitz preferences), the analysis is simplified by a...
Persistent link: https://www.econbiz.de/10010599716
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.
Persistent link: https://www.econbiz.de/10010662379
Organization that permits member countries to impose retaliatory tariffs in response to trade violations committed by other members …. We show that monetary fines are more efficient than tariffs in terms of granting compensation to injured parties when … violating country. If fines must ultimately be supported by the threat of retaliatory tariffs, they fail to yield a more …
Persistent link: https://www.econbiz.de/10005656251
Historically, tariffs have been an attractive policy tool to protect domestic industries. The benefits of such a policy …
Persistent link: https://www.econbiz.de/10010877688
as tariffs, can continue to disadvantage foreign firms. We analyze the bidding strategies in such a game and show that … when domestic profits are valued, tariffs will be used to discriminate against foreign firms. Furthermore, we find that … optimal tariffs can be more protectionist than the optimal price preference, resulting in lower expected domestic welfare and …
Persistent link: https://www.econbiz.de/10010904650