Template-Type: ReDIF-Paper 1.0
Author-Name: Jie Ma
Author-Name-First: Jie
Author-Name-Last: Ma
Author-Email: jie.ma@uibe.edu.cn
Author-Workplace-Name: University of Business and Economics
Author-Name: Ian Wooton
Author-Name-First: Ian
Author-Name-Last: Wooton
Author-Email: ian.wood@strath.ac.uk
Author-Workplace-Name: Department of Economics, University of Strathclyde
Title: Market size, product differentiation and bidding for new varities
Abstract: We analyse a firm's investment in a regional economy composed of two countries.  The firm already manufactures a horizontally differentiated good in the region and we determine the firm's equilibrium location choice for the new good and the welfare consequences of fiscal competition between the two countries.  We find that the firm's location decision is efficient.  Fiscal competition does not affect the location of production but redistributes rents between the firm and the taxpayers of the host country.  The implications of endogenous product differentiation and the new good being produced by a competing firm are also considered.  As far as we know the tax competition literature has not previously addressed the issue of product differentiation.
Length: 30 pages
Creation-Date: 2019-03
Revision-Date: 
Publication-Status: Published
File-URL: https://www.strath.ac.uk/media/1newwebsite/departmentsubject/economics/research/researchdiscussionpapers/19-03.pdf.pagespeed.ce.6sQIh5L2jQ.pdf
File-Format: Application/pdf
Number: 1903
Classification-JEL: F21, F23, L22
Keywords: FDI, import substitution, market size, MNEs, product differentiation
Handle: RePEc:str:wpaper:1903