Multinationals, tax competition and outside options.

Lower barriers to entry and developments in world capital markets have increasedthe actual and potential mobility of multinational enterprises. This poses challengesfor host countries' tax policies. The paper examines implications for such policies, formultinantionals' investment decisions and for host countries' welfare in cooperativeand non-cooperative settings. An interesting …nding is that more attractive outsideoptions for …rms may constitute a win-win situation; the …rm as well as its presenthost countries may gain when this occurs...