Competition for Business Location: A Survey

Dembour, Carole

doi:10.1007/s10842-007-0013-y

Cited by 28 publications

(16 citation statements)

References 83 publications

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“…2 See Dembour (2008) for a survey of literature on competitive location policies. For surveys of the tax competition literature in general, see Wilson (1999) and Wilson and Wildasin (2004).…”

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confidence: 99%

Does competition for capital discipline governments? The role of fiscal equalization

Liu

2013

Int Tax Public Finance

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confidence: 99%

Does competition for capital discipline governments? The role of fiscal equalization

Liu

2013

Int Tax Public Finance

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“…All of these techniques allow a multinational firm to minimize its worldwide tax bill while imposing significant accounting and other costs on the firm itself. 11 To account for the possibility of profit misdeclaration, we denote by π i and π F the amount of profits that the multinational firm declares to country i and country F tax authorities, respectively, and we postulate that they may differ from the profits that the firm actually realizes at each location, denoted by Π i and Π F . Our argument is that the firm has to declare the totality of its worldwide profits, i.e.…”

Section: Profits Of the Multinational Firmmentioning

confidence: 99%

“…We assume these costs to be increasing in the difference between realized and declared profits, that is in the amount of profits that the firm reallocates across the two countries, and we let them also depend on an exogenous parameter, γ ≥ 0, which might reflect governments' intensity in controlling tax avoidance by multinational firms, or, alternatively, international tax base mobility. More specifically, the costs for profit shifting in either 11 The existence of profit shifting -notably, from the United States to low-tax countries (or tax havens) -is widely documented. See Hines (1999) for a comprehensive survey of the empirical literature on this issue.…”

Section: Profits Of the Multinational Firmmentioning

confidence: 99%

Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Amerighi

Feo

2013

SSRN Journal

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We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.

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“…The economy consists of n symmetric metropolitan regions indexed 11 Similar evidence exists for different kinds of foreign investment. Evidence that mainly highly agglomerated centres compete for foreign investment comes, e.g., from Guimarães et al (2000) and is summarised by Dembour (2008).…”

Section: Model Structurementioning

confidence: 99%

Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

Janeba

Osterloh

2012

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp12005.pdf Non-technical summaryIn this paper we use survey responses of mayors from cities and municipalities in the German state of Baden-Württemberg to study the "true" spatial structure of local tax competition. The size of the jurisdiction and, in particular, its economic function turn out to be the important determinants of the decision-maker's perception of the intensity of competition. In particular, respondents from urban centres perceive a much higher intensity of competition for firms with respect to competing jurisdictions which are distant or even located in other countries. Our empirical findings confirm the assumption of the empirical literature about the importance of neighbourhood competition, but it also shows that another important factor is missing. In particular, the assumption of the empirical literature that competition takes place only among neighbours is at odds with the theoretical approaches where all jurisdictions compete simultaneously. The existing standard models, however, are incapable of explaining the empirical particularities of local competition.These empirical findings motivate our sequential tax competition model which considers a rich competition structure. Essentially, we assume a number of metropolitan regions which each consist of one city centre and a number of surrounding (rural) jurisdictions.The model has two levels of competition for mobile capital: first, cities simultaneously compete for mobile capital by setting their tax policies (which can be interpreted as competition for large scale investments, such as headquarters); second, rural areas compete simultaneously for capital within their metropolitan area (which corresponds to the neighbourhood competition).We are especially interested in the effects of a rise in the number of metropolitan regions, which represents the increase in external competition, for example through globalisation, Eastern enlargement of the EU or German unification. It is shown thatsimilarly to standard models -the capital tax rates of the cities converge to zero, but they stay positive for the hinterlands. Moreover, cities are more affected by an increase in external competition than hinterlands, since they reduce capital tax rates more and shift more from mobile capital to immobile labour taxation. In contrast to existing models, our results imply that larger jurisdictions do not necessarily rely mor...

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Competition for Business Location: A Survey

Abstract: location, taxes, infrastructure, competition, H32, H71, R12,

Cited by 28 publications

References 83 publications

Does competition for capital discipline governments? The role of fiscal equalization

Does competition for capital discipline governments? The role of fiscal equalization

Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

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