International Share Ownership, Profit Shifting and Protectionism

Terence Edwards

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: In this paper, I examine the implications of increasing globalisation of stock market ownership on the economics of protection. Current data on European, Japanese and Australian stock exchanges indicate that in most cases over 30 per cent of the stock market is foreign-owned, a large increase on a couple of decades ago. Foreign share ownership in the USA lags behind these levels, but is increasing fast. This degree of foreign share-ownership is likely to change qualitatively the nature of the response of governments to FDI and support for `domestic' firms. In particular, a series worked examples, based upon duopoly theory, suggest that the level of foreign share-ownership is usually sufficient for profit-shifting on its own no longer to justify protection .

Keywords: Trade; Oligopoly; Capital Ownership. (search for similar items in EconPapers)
JEL-codes: F10 F12 (search for similar items in EconPapers)
Date: 2007-11, Revised 2007-11
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Journal Article: International Share Ownership, Profit Shifting and Protectionism (2008)
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