Tax competition with spatial elements

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This study explored how governments use tax competition to attract foreign firms, and provided possible policy implications. The study analyzed tax competition faced by governments under the globalization of economic activities by developing theoretical models for the investment location choice of foreign firm wishing to undertake foreign direct investment and choose a joint venture partner. This study focused on country risk faced by a foreign firm that plans overseas expansion. Specifically, it examined how both country size as a locational advantage and country risk as a locational disadvantage affect the location choice of foreign firm. In addition, the study clarified the relationship between market size and tax policies of governments regarding the choice of international joint venture partner in an integrated market.