Ferrett, Ben; Wooton, Ian - In: Economics Bulletin 33 (2013) 3, pp. 2202-2208
We introduce bidding costs into a standard model of tax/subsidy competition between two potential host countries to attract the plant of a monopoly firm. Such a bidding cost, even if it is infinitesimal, qualitatively alters the resulting equilibrium. At most one country offers fiscal...