In this paper, we analyse the role of mobility in tax and subsidy competition. Our primary result is that increasing … mobility intensi.es tax competition, it weakens subsidy competition. The resulting fall in the governments' subsidy payments … governments are first engaged in subsidy competition and thereafter in tax competition, and firms locate and potentially relocate …

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 offer to subsidize the firm. Furthermore, the maximum subsidy is greater …