Regional Tax Coordination and Foreign Direct Investment

Andreas H aufler and Ian Wootton
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Andreas H aufler: University of Goettingen and CESifo
Ian Wootton: University of Glasgow and CEPR
Authors registered in the RePEc Author Service: Ian Wooton (ian.wooton@strath.ac.uk)

No 98, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: The paper analyzes the effects of a regionally coordinated profit tax in a model with three active countries, one of which is not part of the union, and a globally mobile firm. We show that regional tax coordination can lead to two types of welfare gains. First, for investments that would take place in the region in the absence of coordination, this measure can transfer location rents from the firm to the union. Second, by internalizing all of the union's benefits from foreign direct investment, a coordinated policy attracts more investment than when member states act in isolation. Consequently, tax levels may rise or fall under regional coordination.

Date: 2002-08-29
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Related works:
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2003)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2001)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2001)
Working Paper: Regional Tax Coordination and Foreign Direct Investment (2001)
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