Strategic Tax Competition; Implications of National Ownership

26 Pages Posted: 23 Mar 2001

See all articles by Trond E. Olsen

Trond E. Olsen

Norwegian School of Economics (NHH) - Department of Business and Management Science; CESifo (Center for Economic Studies and Ifo Institute)

Petter Osmundsen

University of Stavanger; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2000

Abstract

Two jurisdictions compete to capture the rents of a large multinational enterprise (MNE) which invests locally and which is partly owned by local investors. The MNE contributes to local welfare by tax payments and dividends, and it has private information about the efficiency of the operations in the two localisations. It is shown that the distortions in the MNE?s real investment portfolio are determined by a trade-off between fiscal externalities and equity externalities, and that investments in the case of strategic tax competition may be lower than in the co-operative case. Ownership matters, and we show how the firm may reduce its overall tax payments by influencing the distribution of owner shares between investors in the two countries.

Keywords: Tax competition, mobility, common agency

JEL Classification: D82, H21, L51

Suggested Citation

Olsen, Trond E. and Osmundsen, Petter, Strategic Tax Competition; Implications of National Ownership (April 2000). Available at SSRN: https://ssrn.com/abstract=263817 or http://dx.doi.org/10.2139/ssrn.263817

Trond E. Olsen (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
N-5045 Bergen
Norway
+47 55 95 99 76 (Phone)
+47 55 95 96 50 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Petter Osmundsen

University of Stavanger ( email )

4036 Stavanger
Norway

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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