A Quantitative Analysis of Subsidy Competition in the U.S

Ralph Ossa

No 20975, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I use a quantitative economic geography model to explore subsidy competition among U.S. states. I ask what motivates state governments to subsidize firm relocations and quantify how strong their incentives are. I also characterize fully non-cooperative and cooperative subsidy choices and assess how far away we are from these extremes. I find that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. I also find that observed subsidies are closer to cooperative than non-cooperative subsidies but the potential losses from an escalation of subsidy competition are large.

JEL-codes: F12 F13 R12 R58 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-geo, nep-mfd and nep-ure
Note: ITI
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Citations: View citations in EconPapers (17)

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Working Paper: A Quantitative Analysis of Subsidy Competition in the U.S (2015)
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