Competing for Foreign Direct Investments: A Real Options Approach

Paolo M. Panteghini () and Guttorm Schjelderup ()

No CESifo Working Paper No. 929, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper uses the Bad News Principle to study how the ability of multinationals to shift profits by transfer pricing affects both the timing of foreign direct investment decisions and government tax policy. A main finding of the paper is that if countries compete to attract foreign direct investments, only weak conditions are needed to establish that welfare is higher when firms can postpone irreversible investments as opposed to when they cannot.

Keywords: corporate taxation; irreversibility; MNE; real options and uncertainty (search for similar items in EconPapers)
JEL-codes: H25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn
Date: 2003
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cesifo-group.de/DocCIDL/cesifo_wp929.pdf (application/pdf)

Related works:
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:ces:ceswps:_929

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Group Munich
Address: Poschingerstrasse 5, 81679 Munich
Series data maintained by Julio Saavedra ().