Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228199
Authors: 
Davies, Ronald B.
Han, Yutao
Hynes, Kate
Wang, Yong
Year of Publication: 
2020
Series/Report no.: 
Working Paper Series No. WP20/19
Abstract: 
We examine competition for foreign direct investment when governments compete in tax incentives along with intellectual property rights (IRPs) protection. Higher IPRs result in a lower probability of the multinational enterprise (MNE) being imitated and thus higher expected profits and tax revenues, all else equal. We show that, from the perspective of competing hosts, equilibrium IPRs are too high while taxes are too low. Coordination between jurisdictions can therefore lower the multinational's expected payoff, providing a rationale for why during recent trade negotiations FDI home countries complain about low IPRs in some locations while not pushing for them to be centrally determined.
Subjects: 
Tax competition
FDI
IPRs
Imitation
JEL: 
F23
H25
034
Document Type: 
Working Paper

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