Subsidy Competition and the Mode of FDI: Acquisition vs Greenfield

Facundo Albornoz ()

No 05-15R, Discussion Papers from Department of Economics, University of Birmingham

Abstract: We model subsidy competition for a foreign MNC’s investment in two potential PTA partners. Taking into account acquisitions as an alternative investment mode weakens the case for subsidising greenfield investment. Competition between countries results in welfare losses, even more so if spillovers from the MNC’s presence exist. Hence in many cases a ban on subsidies may increase welfare. In addition, we show how trade integration affects the prospects for social waste.

Keywords: Subsidy Competition; FDI; Greenfield Investment; Mergers and Acquisitions; Regional Integration; Spillovers (search for similar items in EconPapers)
JEL-codes: F15 F21 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-int
Date: 2007-08
View list of references

Downloads: (external link)
ftp://ftp.bham.ac.uk/pub/RePEc/pdf/Ack2007.pdf

Related works:
Working Paper: Subsidy Competition and the Mode of FDI: Acquisition vs Greenfield (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bir:birmec:05-15r

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of Birmingham
Contact information at EDIRC.
Series data maintained by Colin Rowat ().