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Title: Competing for a duopoly: international trade and tax competition
Authors: Ferrett, Benjamin E.
Wooton, Ian
Issue Date: 2010
Publisher: John Wiley and Sons (© Canadian Economics Association)
Citation: FERRETT, B. and WOOTON, I., 2010. Competing for a duopoly: international trade and tax competition. Canadian Journal of Economics, 43 (3), pp.776-794.
Abstract: We analyse the tax/subsidy competition between two potential host governments to attract the plants of firms in a duopolistic industry. While competition between identical countries for a monopolist’s investment is known to result in subsidy inflation,two firms can be taxed in equilibrium with the host countries appropriating the entire social surplus generated within the industry, despite explicit non-cooperation between governments. Trade costs mean that the firms prefer dispersed to co-located production,creating these taxation opportunities for the host countries. We determine the country-size asymmetry that changes the nature of the equilibrium, inducing concentration of production in the larger country.
Description: This is the peer reviewed version of the following article: FERRETT, B. and WOOTON, I., 2010. Competing for a duopoly: international trade and tax competition. Canadian Journal of Economics, 43 (3), pp.776-794, which has been published in final form at: http://dx.doi.org/10.1111/j.1540-5982.2010.01594.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Version: Accepted for publication
DOI: 10.1111/j.1540-5982.2010.01594.x
URI: https://dspace.lboro.ac.uk/2134/23373
Publisher Link: http://dx.doi.org/10.1111/j.1540-5982.2010.01594.x
ISSN: 0008-4085
Appears in Collections:Published Articles (Economics)

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