Tax competition -- Greenfield investment versus mergers and acquisitions

Johannes Becker and Clemens Fuest

Regional Science and Urban Economics, 2011, vol. 41, issue 5, 476-486

Abstract: In this paper, we analyse tax competition in a model where investor firms have the choice between two types of investment, greenfield investment and mergers and acquisitions. We show that the coexistence of these two types of investment intensifies tax competition in comparison to the case where there is only greenfield investment. If a specific tax on acquisitions is available, this result changes. Then, tax competition is mitigated compared to the pure greenfield case. The existence of an acquisition tax may even lead to corporate overtaxation.

Keywords: Corporate; taxation; Mergers; and; acquisitions; Tax; competition (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (9)

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Working Paper: Tax Competition – Greenfield Investment versus Mergers and Acquisitions (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:41:y:2011:i:5:p:476-486

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