International Competition for R&D Investment

Trond Olsen and Petter Osmundsen

Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen

Abstract: Two jurisdictions compete to attract shares of the R&D investment budget of a large multinational enterprise, whose investments potentially confer positive spillovers on national firms. The firm has private information both about its efficiency and about spillovers. It is shown that strategic tax competition may lead to overinvestments relative to the first-best allocation, that the excessive investments occur in the country where the positive spillover effects are lowest, and that they are most severe for the least efficient firms. This occurs for sufficently asymmetric spillovers, and implies that investments under competition are then excessively spread out and not properly concentrated to the country where spillovers would be largest.

Keywords: RESEARCH AND DEVELOPMENT; INVESTMENTS; COMPETITION (search for similar items in EconPapers)
JEL-codes: L10 O32 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2000
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:bereco:1500

Access Statistics for this paper

More papers in Norway; Department of Economics, University of Bergen from Department of Economics, University of Bergen Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().