Keeping Mobile Firms at Home: The Role of Public Enterprise

We show that the presence of a public firm can deter private firms from relocating to foreign countries in response to high domestic taxation. We also examine partially privatized public firms showing that the higher the exogenous domestic profit tax, the larger the public ownership share needs to b...

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Bibliographic Details
Published in:The B.E. journal of economic analysis & policy 2024-04, Vol.24 (2), p.659-671
Main Authors: Fjell, Kenneth, Heywood, John S., Pal, Debashis
Format: Article
Language:English
Subjects:
Business ownership
Corporate profits
domestic welfare
international mobility
L13
L33
mixed oligopoly
Mobility
Ownership
partial privatization
Profits
Public enterprise
Public ownership
Taxation
Welfare
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Summary:We show that the presence of a public firm can deter private firms from relocating to foreign countries in response to high domestic taxation. We also examine partially privatized public firms showing that the higher the exogenous domestic profit tax, the larger the public ownership share needs to be to deter private firm mobility. We illustrate that deterring mobility increases domestic welfare.
ISSN:1935-1682
2194-6108
1935-1682
DOI:10.1515/bejeap-2023-0350