Market Size, Product Differentiation and Bidding for New Varieties

Jie Ma, Ian Wooton

Research output: Working paper

Abstract

We analyse a firm’s investment decision in a regional economy composed of two countries. The firm already manufactures a horizontally differentiated good in the region and we determine the firm’s equilibrium location choice for the new good and the welfare consequences of fiscal competition between the two countries. We find that the firm’s location decision is efficient. Fiscal competition does not affect the location of production but redistributes rents between the firm and the taxpayers of the host country. The implications of endogenous product differentiation and the new good being produced by a competing firm are also considered. As far as we know, the tax competition literature has not previously addressed the issue of product differentiation.
LanguageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-33
Number of pages33
Publication statusPublished - 28 Feb 2019

Publication series

NameStrathclyde Discussion Papers in Economics
PublisherUniversity of Strathclyde
No.3
Volume19

Fingerprint

Product differentiation
Bidding
Market size
Fiscal competition
Tax competition
Location choice
Investment decision
Host country
Rent
Regional economy
Location decision

Keywords

  • FDI
  • import substitution
  • market size
  • MNEs
  • product differentiation
  • investment decisions
  • fiscal competition

Cite this

Ma, J., & Wooton, I. (2019). Market Size, Product Differentiation and Bidding for New Varieties. (pp. 1-33). (Strathclyde Discussion Papers in Economics; Vol. 19, No. 3). Glasgow: University of Strathclyde.
Ma, Jie ; Wooton, Ian. / Market Size, Product Differentiation and Bidding for New Varieties. Glasgow : University of Strathclyde, 2019. pp. 1-33 (Strathclyde Discussion Papers in Economics; 3).
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Ma, J & Wooton, I 2019 'Market Size, Product Differentiation and Bidding for New Varieties' Strathclyde Discussion Papers in Economics, no. 3, vol. 19, University of Strathclyde, Glasgow, pp. 1-33.

Market Size, Product Differentiation and Bidding for New Varieties. / Ma, Jie; Wooton, Ian.

Glasgow : University of Strathclyde, 2019. p. 1-33 (Strathclyde Discussion Papers in Economics; Vol. 19, No. 3).

Research output: Working paper

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Ma J, Wooton I. Market Size, Product Differentiation and Bidding for New Varieties. Glasgow: University of Strathclyde. 2019 Feb 28, p. 1-33. (Strathclyde Discussion Papers in Economics; 3).