Foreign direct investment under oligopoly: Profit shifting or profit capturing?

被引:26
作者
Janeba, E
机构
[1] Department of Economics, Indiana University, Bloomington
关键词
foreign direct investment; corporate taxation; imperfect competition;
D O I
10.1016/0047-2727(95)01559-0
中图分类号
F [经济];
学科分类号
02 ;
摘要
In this paper a model of taxation of foreign source corporate income is developed when the output market is not perfectly competitive. Profit shifting policies, similar to those in the new trade literature, are also present in the case of foreign direct investment (FDI). There are, however, important differences to the new trade theory since in case of FDI, (i) corporate taxation and double taxation relief are the policy instruments rather than output or revenue taxes, (ii) countries are not symmetric in the sense that the host country has the first right to tax the multinational's profit and the home country reacts by providing double taxation relief, and (iii) output but not corporate taxation is specific to imperfectly competitive industries. It is argued that (a) variants of a tax credit are analogous to export subsidies, (b) when the home country operates a tax credit system the host country's incentive to capture the multinational's profit is bounded under imperfect competition, (c) when the host country offers a tax holiday the home country should imitate this policy, and (d) in the presence of perfect competitive industries, double taxation relief is a good instrument to target imperfectly competitive industries.
引用
收藏
页码:423 / 445
页数:23
相关论文
共 16 条
[1]   STRATEGIC BEHAVIOR AND THE RULES FOR INTERNATIONAL TAXATION OF CAPITAL [J].
BOND, EW ;
SAMUELSON, L .
ECONOMIC JOURNAL, 1989, 99 (398) :1099-1111
[2]   BARGAINING WITH COMMITMENT, CHOICE OF TECHNIQUES, AND DIRECT FOREIGN-INVESTMENT [J].
BOND, EW ;
SAMUELSON, L .
JOURNAL OF INTERNATIONAL ECONOMICS, 1989, 26 (1-2) :77-97
[3]   OPTIMAL TAX AND TARIFF POLICIES WITH TAX CREDITS [J].
BOND, EW .
JOURNAL OF INTERNATIONAL ECONOMICS, 1991, 30 (3-4) :317-329
[4]   EXPORT SUBSIDIES AND INTERNATIONAL MARKET SHARE RIVALRY [J].
BRANDER, JA ;
SPENCER, BJ .
JOURNAL OF INTERNATIONAL ECONOMICS, 1985, 18 (1-2) :83-100
[5]   FOREIGN DIRECT-INVESTMENT WITH UNEMPLOYMENT AND ENDOGENOUS TAXES AND TARIFFS [J].
BRANDER, JA ;
SPENCER, BJ .
JOURNAL OF INTERNATIONAL ECONOMICS, 1987, 22 (3-4) :257-279
[6]   COMPARATIVE STATICS FOR OLIGOPOLY [J].
DIXIT, A .
INTERNATIONAL ECONOMIC REVIEW, 1986, 27 (01) :107-122
[7]  
DIXIT A, 1984, EC J S, V94, P1
[8]   OPTIMAL TRADE AND INDUSTRIAL-POLICY UNDER OLIGOPOLY [J].
EATON, J ;
GROSSMAN, GM .
QUARTERLY JOURNAL OF ECONOMICS, 1986, 101 (02) :383-406
[9]  
FELDSTEIN M, 1979, Q J ECON, V94, P613
[10]   CAN CAPITAL INCOME-TAXES SURVIVE IN OPEN ECONOMIES [J].
GORDON, RH .
JOURNAL OF FINANCE, 1992, 47 (03) :1159-1180