Competition for Firms in an Oligopolistic Industry: Do Firms or Countries Have to Pay?

Haufler, Andreas und Wooton, Ian (März 2007): Competition for Firms in an Oligopolistic Industry: Do Firms or Countries Have to Pay? Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2007-13

Abstract

We set up a model of generalised oligopoly where two countries of different size compete for an exogenous, but variable, number of identical firms. The model combines a desire by national governments to attract internationally mobile firms with the existence of location rents that arise even in a symmetric equilibrium where firms are dispersed. As economic integration proceeds, equilibrium taxes decline, switching from positive to negative levels, and then rise as trade costs fall even further. A range of trade costs is identified where economic integration raises the welfare of the small country, but lowers welfare in the large country.

• Dokumententyp: Paper
• Keywords: tax and subsidy competition, oligopolistic markets
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics ; Volkswirtschaft > Munich Discussion Papers in Economics > Finanzwissenschaft ; Volkswirtschaft > Lehrstühle > Seminar für Wirtschaftspolitik
• Themengebiete: 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie ; 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: H25, H73, F15
• Sprache: Englisch