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Bjorvatn, Kjetil; Eckel, Carsten (2006): Policy competition for foreign direct investment between asymmetric countries. In: European Economic Review, Vol. 50, No. 7: pp. 1891-1907

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The present paper analyses policy competition for foreign direct investment between countries of different size and different market structure. We demonstrate how policy competition affects the location decision of the foreign investor and derive welfare implications. The key variables in our analysis are intra-regional trade costs, differences in market size, and minimum wages.

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