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Transport Infrastructure Investments and Competition for FDI
Hynes, Kate; Ma, Jie; Yuan, Cheng
This paper studies how transport infrastructure investments affect a bidding war for a firm between two asymmetric countries within a region in a context of imperfect competition, where transport infrastructure investments play the role of a global public good, leading to a reduction in the unit trade cost between the two countries. A number of interesting results are derived from the model. In particular, transport infrastructure investments can intensify fiscal competition between the two countries. Surprisingly, this conventional wisdom seems to be confirmed by this paper for the first time. Welfare implications of the model are also examined.
Keyword(s): Transport infrastructure investments; Fiscal competition; FDI; Imperfectly competitive market; F21; F23; H40
Publication Date:
2017
Type: Working paper
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): University College Dublin. School of Economics
First Indexed: 2019-05-11 06:34:38 Last Updated: 2019-05-11 06:34:38