We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for...

In this paper we investigate tax/subsidy competition for FDI between countries of different size when a domestic firm is the incumbent in the largest market. We investigate how the nature (public or private) of the incumbent firm affects policy competition between the two governments seeking to...

We study the impact of transfer pricing rules on sales prices, firms’ organizational structure, andconsumers’ utility within a two-country monopolistic competition model featuring source-basedprofit taxes that differ across countries. Firms can either become multinationals, i.e., they serve...

We develop a model with two asymmetric countries. Firms choose the number andthe location of plants that they operate. The production of each firm increases whentrade costs fall. The fall also induces multinationals to repatriate their production intoa single country, which is likely to be the...

We distill the main insights from recent trade models on firms' responses toglobalization. Our primary aim is to assess the economic impact and the welfareimplications of the resulting reallocation of resources across frims and countries. In sodoing, we bring theory into life through the...