Market Size, Product Differentiation and Bidding for New Varieties

Jie Ma, Ian Wooton

Research output: Working paper

21 Downloads (Pure)

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.
Original 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

Keywords

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

Fingerprint Dive into the research topics of 'Market Size, Product Differentiation and Bidding for New Varieties'. Together they form a unique fingerprint.

Cite this