The Intangible Economy

Radek Sauer and Radek Šauer
Authors registered in the RePEc Author Service: Radek Šauer

No 12957, CESifo Working Paper Series from CESifo

Abstract: The paper explores how a small low-tax economy is affected by foreign corporate-tax shocks. To address this question, I develop a dynamic general-equilibrium model, in which multinational firms engage in both tangible and intangible FDI. Intangible assets arise from multinationals' R&D activities. Each multinational decides whether to place its intangibles in the parent firm or in an overseas affiliate. The placement decision shapes the intra-firm trade in royalties and R&D services. The model reveals that corporate taxes can directly impact arm's-length prices of multinational firms. I investigate territorial corporate taxation as well as worldwide taxation of intangible income.

Keywords: intangible assets; multinational enterprises; corporate taxation; royalties; R&D services; endogenous markups (search for similar items in EconPapers)
JEL-codes: E22 E62 F23 H25 (search for similar items in EconPapers)
Date: 2026
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