Economics Brown Bag Seminar Series - Kate Hynes (University College Dublin)
Room 605, Level 6, FBE Building, 111 Barry Street, CarltonMap
Faisal Sohail and Aaron Barkley
Title: Competition in Taxes and Intellectual Property Rights
Abstract: Our paper examines competition for foreign direct investment when governments use tax incentives along with intellectual property rights (IRPs). Higher IPRs result in a lower probability of the foreign ﬁrm being imitated. From the ﬁrm’s point of view, lower taxes and higher IPRs are preferable. From a government’s perspective, while lower taxes are less beneﬁcial all else equal, there is a trade oﬀ from higher IPRs. On the one hand, stronger IPRs are attractive because they increase the MNE’s expected proﬁts, thus increasing tax revenues. Whereas on the other hand, weaker IPRs both cost less and, by increasing the chance of competition, result in lower expected prices beneﬁting consumers. Our paper explores the interplay of these diﬀering motivations, both unilaterally and jointly between the two potential host countries.