Competing for Foreign Direct Investments: A Real Options Approach

This paper uses the Bad News Principle to study how the ability of multinationals to shift profits by transfer pricing affects both the timing of foreign direct investment decisions and government tax policy. A main finding of the paper is that if countries compete to attract foreign direct investments, only weak conditions are needed to establish that welfare is higher when firms can postpone irreversible investments as opposed to when they cannot.

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Year of publication:	2003
Authors:	Panteghini, Paolo ; Schjelderup, Guttorm
Institutions:	CESifo
Subject:	corporate taxation \| irreversibility \| MNE \| real options and uncertainty

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Extent:	application/pdf
Series:	CESifo Working Paper Series.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 929
Classification:	H25 - Business Taxes and Subsidies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005405899