Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26600
Authors: 
Haupt, Alexander
Krieger, Tim
Year of Publication: 
2009
Series/Report no.: 
CESifo working paper 2555
Abstract: 
In this paper, we analyse the role of mobility in tax and subsidy competition. Our primary result is that increasing relocation mobility of firms leads to increasing net tax revenues under fairly weak conditions. While enhanced relocation mobility intensifies tax competition, it weakens subsidy competition. The resulting fall in the governments' subsidy payments over-compensates the decline in tax revenues, leading to a rise in net tax revenues. We derive this conclusion in a model in which two governments are first engaged in subsidy competition and thereafter in tax competition, and firms locate and potentially relocate in response to the two political choices.
Subjects: 
Tax competition
subsidy competition
capital and firm mobility
foreign direct investment
JEL: 
H71
H87
F21
H25
Document Type: 
Working Paper

Files in This Item:
File
Size
418.31 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.