This paper shows that the OECD inclusive framework of Pillar Two fails to implement the claimed 15% minimum corporate tax for all subsidiaries of multinational corporations that are not shell companies. The reason is that the Substance-based Income Exclusion of Pillar Two allows to tax-deduct...

This paper discusses environmental policies in response to foreign direct investment (FDI) in a symmetrie two-country setting, where firms' behavior affects government policy decisions. We show that two alternative equilibria with FDI are possible: (i) one with unilateral FDI, where one firm is...

This paper discusses the issue of competitiveness and environmental regulation in a dynamic framework. It presents an example and a general model. It is shown that the dynamic framework cannot lend general support to the hypothesis that strict environmental policies result in an increase in...

This paper discusses a simultaneous market entry game between two firms with different fixed costs. This case is a typical application of mixed strategy equilibria. Conventional wisdom would suggest that the low-cost firm is more likely to enter the market. This presumption is wrong. Instead,...

This paper demonstrates that the Bertrand paradox does not hold if cost functions are strictly convex. Instead, multiple equilibria exist which can be Pareto-ranked. The paper shows that the Pareto-dominant equilibrium may imply profus higher than in Cournot competition or may even sustain...

Markov perfection has become the usual solution concept to determine the non-cooperative equilibrium in a dynamic game. However, Markov perfection is a stronger solution concept than subgame perfection: Markov perfection rules out any cooperation in a repeated prisoners' dilemma game because the...

This paper questions the standard results of an international noncooperative reduction game through considering scope effects between reduction and adaptation policies. In particular, it demonstrates that scope effects can result in positively sloped reaction curves. The paper discusses also the...

This paper shows that in-kind-transfers are an effective instrument to stabilize agreements when compliance cannot be guaranteed. It demonstrates the weak superiority of in-kind-transfers for a unilateral relationship between two agents. In particular, it proves that, under conditions of perfect...

This paper discusses the issue of competitiveness and environmental regulation from the viewpoint of strategic environmental policy models. It demonstrates that the incentive for strategic policies is determined only by the reaction of the opponent. Furthermore, it shows that the conditions...