Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75935
Authors: 
Haufler, Andreas
Wooton, Ian
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 628
Abstract: 
The paper analyzes the effects of a regionally coordinated profit tax in a model with three active countries, one of which is not part of the union, and a globally mobile firm. We show that regional tax coordination can lead to two types of welfare gains. First, for investments that would take place in the region in the absence of coordination, this measure can transfer location rents from the firm to the union. Second, by internalizing all of the union's benefits from foreign direct investment, a coordinated policy attracts more investment than when member states act in isolation. Consequently, tax levels may rise or fall under regional coordination.
Subjects: 
tax competition
regional coordination
international investment
Document Type: 
Working Paper

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