Subsidy Competition and the Role of Firm Ownership

Mittermaier, Ferdinand (September 2007): Subsidy Competition and the Role of Firm Ownership. Discussion Papers in Economics 2007-31

Abstract

This paper addresses the role that foreign vs. domestic ownership of companies plays for governments in asymmetric countries' competition for a multinational's subsidiary. I argue that equilibrium subsidies as well as a foreign investor's location decision in policy competition between these countries critically depend on the ownership structure of incumbent firms. This shows that small countries with few national incumbents in an industry may be successful in attracting multinationals.

• Item Type: Paper
• Keywords: Subsidy competition, foreign direct investment, regional location
• Faculties: Economics; Economics > Munich Discussion Papers in Economics; Economics > Munich Discussion Papers in Economics > Economic Policy
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: F12, F23, H25, L13
• Language: English