Tax competition of two countries for foreign direct investment is analyzed in a Bertrand-Edgeworth dyopoly model. In the Symmetrie case zero-taxation is the unique equilibrium in pure strategies. If assymmetries are introduced only e-equilibria will exist. However, if the tax rate applies to...

The paper addresses the question whether voters would favor a restriction on capital exports to the East, and if so, to what extent. In a two country framework, it is shown that an unrestricted capital outflow is not optimal, in the traditional sense of a social welfare maximizing benevolent...