Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/184818
Authors: 
Hynes, Kate
Ma, Jie
Yuan, Cheng
Year of Publication: 
2017
Series/Report no.: 
Working Paper Series 17/18
Abstract: 
This paper studies how transport infrastructure investments affect a bidding war for a firm between two asymmetric countries within a region in a context of imperfect competition, where transport infrastructure investments play the role of a global public good, leading to a reduction in the unit trade cost between the two countries. A number of interesting results are derived from the model. In particular, transport infrastructure investments can intensify fiscal competition between the two countries. Surprisingly, this conventional wisdom seems to be confirmed by this paper for the first time. Welfare implications of the model are also examined.
Subjects: 
transport infrastructure investments
fiscal competition
FDI
imperfectly competitive market
JEL: 
F21
F23
H40
Document Type: 
Working Paper
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