Competing for Foreign Direct Investments: A Real Options Approach

24 Pages Posted: 2 May 2003

See all articles by Paolo M. Panteghini

Paolo M. Panteghini

Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Guttorm Schjelderup

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

Date Written: April 2003

Abstract

This paper uses the Bad News Principle to study how the ability of multinationals to shift profits by transfer pricing affects both the timing of foreign direct investment decisions and government tax policy. A main finding of the paper is that if countries compete to attract foreign direct investments, only weak conditions are needed to establish that welfare is higher when firms can postpone irreversible investments as opposed to when they cannot.

Keywords: Corporate Taxation, Irreversibility, MNE, Real Options and Uncertainty

JEL Classification: H25

Suggested Citation

Panteghini, Paolo M. and Schjelderup, Guttorm, Competing for Foreign Direct Investments: A Real Options Approach (April 2003). Available at SSRN: https://ssrn.com/abstract=400180

Paolo M. Panteghini (Contact Author)

Department of Economics and Management ( email )

Contrada Santa Chiara 50
BRESCIA, BS 25122
Italy

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

Poschinger Str. 5
Munich, DE-81679
Germany

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

Guttorm Schjelderup

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

Helleveien 30
Bergen, NO-5045
Norway

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
383
Abstract Views
1,877
rank
84,186
PlumX Metrics