Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75671
Authors: 
Dehejia, Vivek
Weichenrieder, Alfons
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 260
Abstract: 
This paper reconsiders the welfare effects of tariff jumping direct investment if mobile capital is subjected to taxation. In contrast to the conventional wisdom, the receiving country may in this case gain from the incremental inflow of capital, as this diverts tax revenues from the rest of the world. In the case of perfect capital mobility, this possibility becomes a certainty. Our argument provides one rationale for a small country to levy a distorting tariff in a second best world in which capital taxes already exist.
Subjects: 
Capital taxation
tariff jumping
foreign direct investment
Document Type: 
Working Paper

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