Regional centrality and tax competition for FDI

Julia Darby, Ben Ferrett and Ian Wooton ()

Regional Science and Urban Economics, 2014, vol. 49, issue C, 84-92

Abstract: We examine a trade model where three countries compete for an exogenous number of firms. In our hub-and-spoke framework, one country is the hub through which all trade with and between spokes takes place. We establish the distribution of industrial activity in the absence of taxes and compare it to the equilibrium when countries compete to attract firms. Even when all countries have the same size, the centrality of the hub sets it apart. We determine how this trading pattern matters, comparing it to a structure with direct trade between all countries. The implications of international tax competition are also examined.

Keywords: Corporate taxes; Devolution; Trade costs; Hub and spoke (search for similar items in EconPapers)
JEL-codes: F15 F23 H25 H73 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Working Paper: Regional Centrality and Tax Competition for FDI (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:49:y:2014:i:c:p:84-92

DOI: 10.1016/j.regsciurbeco.2014.08.006

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