This study develops a two-country policy competition model for foreign direct investment between asymmetric countries. It analyzes how firm ownership via foreign capital affects the investment location choice of the foreign firm, and policy competition between the potential host countries. The...

This article studies government tax competition for firms under agglomeration effects. Agglomeration forces avert races to the bottom. They also eliminate the need to harmonize policy if large regions set policy first. However, if regions set policy at the same time, harmonization can still...

"Race-to-the-bottom" deregulation is to be expected when markets operate across the borders of countries that independently choose and enforce labor policies. Less obviously, in pre-crisis EMU reforms of labor market policies were uneven and related to international imbalances. That pattern is...

We examine the economic justification for providing investment subsidies to foreign-owned multinationals. These provide employment opportunities and generate demand for domestic intermediate inputs, produced by domestic workers with increasing returns to scale. Offering subsidies to...

It is not straightforward to define the ethics of responsibility in cases where the consequences of changes in factors within our control are partly determined by factors beyond our control. In this paper, we suggest that one plausible view is to keep us responsible for the parts of the...