Abstract
AbstractWe examine competition for foreign direct investment when governments compete in tax incentives along with intellectual property rights (IPRs) protection. Higher IPRs result in a lower probability of imitation and thus higher expected profits and tax revenues, all else equal. We derive the Nash equilibrium strategies of two competing jurisdictions and show that since individual hosts do not internalize the benefit of lower prices for other jurisdiction's consumers, the non‐cooperative equilibrium exhibits an IPR externality in addition to the well‐known fiscal externality from tax competition. Thus, compared to joint policy setting, equilibrium IPRs are too high.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.