@techreport{7d32f646397045cb85a4d3cc8981b34f,
title = "Competition for FDI and Profit Shifting: on the Effects of Subsidies and Tax Breaks",
abstract = "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 the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm{\textquoteright}s investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.",
keywords = "policy competition for FDI, profit shifting, tax discrimination",
author = "Oscar Amerighi and {De Feo}, Giuseppe",
note = "Published as a paper within the Discussion Papers in Economics, No. 13-26 (2013)",
year = "2013",
month = oct,
day = "31",
language = "English",
series = "Strathclyde Discussion Papers in Economics",
publisher = "University of Strathclyde",
type = "WorkingPaper",
institution = "University of Strathclyde",
}