Privatization of state-owned enterprises may have important welfare implications, in particular in less developed economies where markets are small and domestic firms are typically relatively weak, both technologically and financially. In these environments, a high-tech foreign investor...

The present paper analyses policy competition for foreign direct investment between countries of different size and different market structure. We demonstrate how policy competition affects the location decision of the foreign investor and derive welfare implications. The key variables in our...

Recent attempts at reaching an international investment agreement have been met with considerable opposition and failed. An important reason for this failure is the diverging interests between the parties involved. The present paper focuses on the interests of host countries, with difference in...

Empirical evidence suggests that technological spillovers are limited by distance. The present paper investigates the implications of this observation for the investment decisions of a technologically leading and lagging firm, located in different countries. Technological spillovers may induce...

The popular Dixit-Stiglitz-Ethier framework proposes that globalization increases the menu of intermediate goods available to downstream firms and that gains from specialization raise welfare unambiguously. This study shows that both results depend critically on the assumption that demand...

This paper models tax competition for mobile firms that aredifferentiated by their productivities Because taxes affect thedistribution of firms, they affect wages prices, and the number of firmsFrom the social planner’s perspective, optimal taxes efficientlydistribute income between private...

This study analyzes the impact of opening up markets on the diffusion of flexible manufacturing in a general equilibrium framework. With flexible manufacturing, suppliers can service a range of downstream industries and do not have to be concerned about being held up. Instead, the vertical...

The paper examines the impact of efficiency-seeking FDI on factor prices, employment, and output. The analysis shows that when transportation costs fall, companies start relocating labor-intensive production processes to low-wage countries. But this does not necessarily hurt workers in the...