ON THE EFFICIENCY OF FISCAL COMPETITION FOR FDI WHEN INCUMBENT FIRMS A FOREIGN-OWNED

We show that the international distribution of ownership of the incumbent firms within a host region matters for the efficiency of the fiscal competition between the region's constituent countries for a new FDI project, If incumbent firms are owned entirely within the host region, then the new plant's location will be efficient. However, when incumbent s are owned outside the host region and the degree of such extra -regional ownership varies substantially across the competing host countries as it does in the data then inefficient locations might win contests for new plants,