Tax competition and the international distribution of firm ownership: an invariance result

B. Ferrett, I. Wooton

Research output: Contribution to journalArticlepeer-review

13 Citations (Scopus)
61 Downloads (Pure)

Abstract

How does the international distribution of firm ownership affect the outcomes of tax/subsidy competition for mobile plants? As corporate ownership becomes increasingly globalised, this question becomes increasingly important for policy. We prove a strong invariance result in the context of the tax/subsidy competition between two host countries for a monopoly firm's plant. Both the equilibrium plant location and the equilibrium tax/subsidy offers are independent of the international distribution of the firm's ownership. The reason is that the tax/subsidy competition equalises the firm's post-tax profits across countries, making owners of capital indifferent towards the location of production.
Original languageEnglish
Pages (from-to)518-531
Number of pages14
JournalInternational Tax and Public Finance
Volume17
Issue number5
DOIs
Publication statusPublished - Oct 2010

Keywords

  • tax/subsidy competition
  • foreign direct investment
  • international distribution
  • firm ownership

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