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摘要
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This paper analyzes policy competition for a
foreign-owned monopolist firm between two asymmetric countries. In
particular, one country has a larger economy than the other country. At the
same time, the small country produces an intermediate good for the final good
production, while the large country does not. We show that whether a country
will win foreign direct investment (FDI) competition is determined by the interaction
between relative transport costs of intermediate and final goods and the
market size of the large country relative to that of the small country; and
policy competition for FDI may Pareto weakly improve national
welfare of the competing countries.
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