Date of Award
Doctor of Philosophy
In the present dissertation, we study tax competitions for foreign direct investment, which includes the study of greenfield investment with the firm's ownership problem and the cross-border merger and acquisition (M\&A). It sheds light on the literature of public finance, international economics, and industrial organization. In chapter 1, we develop an open economy model with two segmented countries and one monopoly firm which registered in one of the countries. Our results show that when there is an exogenous transportation cost when exporting, the market size plays an important role in tax competition, however, when there is an endogenous tariff determined optimally by each country, the market size does not matter in the tax competition. Chapter 2 and 3 study the tax competition for a post-cross-border merger and acquisition firm, which the firm has three location options, located in either of the countries or both. We found that when the governments have two tax instruments, the lump-sum tax and tariff, the market size and price policy play an important role in tax competition. Moreover, when the governments utilize the lump-sum tax as the only instrument for tax competition, both the firm and countries will be better off when the firm keeps both plants.
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