Industrial Blackmail: Dynamic Tax Competition and Public Investment
Randolph McAfee and
Linda Welling ()
Canadian Journal of Economics, 1993, vol. 26, issue 3, 590-608
A dynamic model of intergovernmental competition for a large plant is presented, when local productivity is uncertain. One firm determines the location of its plant in each period by conducting an auction, soliciting bids from local governments. Equilibrium subsidies from the local governments are derived. The author also consider a two-stage game where local governments first choose a level of costly infrastructure then participate in the sequential auction. Even when costs are identical across locations, investing in different levels of infrastructure is a Nash equilibrium. Moreover, when infrastructure is endogenous in this manner, it is chosen efficiently.
References: Add references at CitEc
Citations: View citations in EconPapers (64) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0008-4085%2819930 ... BDTCA%3E2.0.CO%3B2-O (text/html)
only available to JSTOR subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:26:y:1993:i:3:p:590-608
Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php
Access Statistics for this article
Canadian Journal of Economics is currently edited by Katherine Cuff
More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().