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SSRN Electronic Journal
Article . 2013 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2013
Data sources: EconStor
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FDI, Trade Costs and Regional Asymmetries

Authors: Darby, Julia; Ferrett, Ben; Wooton, Ian;

FDI, Trade Costs and Regional Asymmetries

Abstract

We set up a trade model where three countries compete for an exogenous number of firms. Our innovation lies in the geography of the model. Of the three countries, one is the hub through which all trade takes place. First, we establish the natural geography of the region, which is given by the equilibrium distribution of industrial activity in the absence of taxes or subsidies. We then examine the implications for corporate taxes when the countries compete with each other to attract firms. We find that, even when all countries are the same size, the centrality of the hub gives it an advantage in tax setting, such that its equilibrium tax can be larger than that of the spokes and yet it still attracts a disproportionate share of industry. Thus geographic advantage in tax competition has a second dimension, centrality in addition to size.

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Keywords

330, ddc:330, F15, H25, HB, trade costs, HG, corporate taxes, Corporate taxes, devolution, trade costs, F23, corporate taxes, devolution, trade costs, devolution, Economic Theory, Finance, H73, jel: jel:H73, jel: jel:F23, jel: jel:F15, jel: jel:H25

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
Green
bronze