A Race beyond the Bottom: The Nature of Bidding for a Firm

Taiji Furusawa, Kazumi Hori and Ian Wooton ()

No 3049, CESifo Working Paper Series from CESifo

Abstract: We examine how the bidding environment may affect the outcome of tax competition between two countries (or two regions) in attracting a firm’s foreign direct investment (FDI).We compare the equilibrium location choice and payoffs from an English auction, with both complete and incomplete information, relative to those in the traditional setting of a sealed-bid first-price auction. We find that an English auction leads to more aggressive bidding in “race beyond the bottom,” where the nations may bid beyond their own valuations of the FDI. We also discuss the roles of auction protocol and information asymmetry on the auction outcome.

Keywords: tax competition; foreign direct investment; international ownership; English auction; information asymmetry (search for similar items in EconPapers)
JEL-codes: F12 F23 H25 H73 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp3049.pdf (application/pdf)

Related works:
Journal Article: A race beyond the bottom: the nature of bidding for a firm (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3049

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().