Heterogeneous Firms, `Profit Shifting‘ FDI and International Tax Competition

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dc.contributor.author KRAUTHEIM, Sebastian
dc.contributor.author SCHMIDT-EISENLOHR, Tim
dc.date.accessioned 2009-03-17T13:58:22Z
dc.date.available 2009-03-17T13:58:22Z
dc.date.issued 2009
dc.identifier.issn 1725-6704
dc.identifier.uri http://hdl.handle.net/1814/10927
dc.description We are grateful to Giancarlo Corsetti, Omar Licandro and Morten Ravn for constant advice. We would also like to thank Jonathan Eaton, Vincent Rebeyrol, Karolina Ekholm, guest researchers at the Deutsche Bundesbank, participants at the EUI Macro Group and the PSE International Trade lunchtime seminar for fruitful discussions and comments. en
dc.description.abstract We develop a stylized model of international tax competition between a large country and a tax haven. In the large country, firms in a monopolistically competitive industry generate positive profits which can be taxed by the government. Firms have heterogeneous productivity levels and can choose to undertake ‘profit shifting’ FDI in order to benefit from lower tax rates abroad. We find that economies with a low degree of firm heterogeneity and a high degree of monopolistic market power are less affected by international tax competition. They face lower outflows of the tax base and can set higher tax rates. en
dc.description.sponsorship This work was supported by the Région Ile-de-France. en
dc.language.iso en en
dc.publisher European University Institute
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2009/15 en
dc.subject heterogeneous firms en
dc.subject monopolistic competition en
dc.subject tax competition en
dc.subject tax havens en
dc.subject F23 en
dc.subject H25 en
dc.subject H87 en
dc.title Heterogeneous Firms, `Profit Shifting‘ FDI and International Tax Competition en
dc.type Working Paper en
dc.neeo.contributor KRAUTHEIM|Sebastian|aut|
dc.neeo.contributor SCHMIDT-EISENLOHR|Tim|aut|
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