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ESTIMATING THE RIVALNESS OF STATE‐LEVEL INWARD FDI
Author(s) -
Brülhart Marius,
Schmidheiny Kurt
Publication year - 2015
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/jors.12102
Subject(s) - foreign direct investment , nested logit , logit , economics , econometrics , poisson distribution , competition (biology) , tax competition , state (computer science) , mathematical economics , microeconomics , mathematics , macroeconomics , statistics , indirect tax , public economics , tax reform , ecology , algorithm , biology
We develop a method for estimating the rivalness of tax bases using the structures of the conditional logit, Poisson, and nested logit models. As an illustration, we apply this method to estimate the effect of state‐level capital taxation on U.S. inward foreign direct investment (FDI). The assumption of perfect nonrivalness can in some cases be rejected, but the assumption of perfect rivalness cannot. Competition over FDI across U.S. states could well be a zero‐sum game.