a b s t r a c t JEL classification: H25 H73 F13 F15 F22In this paper, we analyze competition among jurisdictions to attract foreign capital through low taxes and public inputs that enhance firms' productivity. The competing jurisdictions are different in size and mobility of capital is costly. We find that for moderate mobility costs, small economies can attract foreign capital by supplying higher levels of public goods than larger jurisdictions, without practicing tax undercutting. The classical result that small jurisdictions are attractive because they engage in tax dumping is recovered only for high mobility costs of capital.

In this paper, we analyze the risk-taking behavior of banks in emerging economies in a context of international capital mobility. Our paper highlights a new channel through which depositors can exercise pressure to control risk-taking. Depositors can reallocate their savings away from their home country to the more protective system of a developed economy. We recover a classical result according to which increased competition resulting from more international nancial openness induces banks to take excessive risks. We nd however that suf ciently high nancial openness is necessary for a positive link between nancial transparency and safe risk management. Finally, we test the relationship between disclosure, nancial openness and bank risk-taking for a panel of 258 banks from the MENA region and Turkey.

This paper analyzes the impact of foreign investments on a small country's economy in the context of international competition. To that end, we model tax and public input competition within a di¤erential game framework between two unequally sized countries. The model accounts for the widely recognized characteristic that small states are more ‡exible in their political decision making than larger countries. However, we also acknowledge that small size is associated with limited institutional capacity in the provision of public services. The model shows that the long-term outcome of international competition crucially depends on the degree of capital mobility. In particular, we show that ‡exibility mitigates against -but does not eliminate -the likelihood of collapse in a small economy. Finally, we note that the bene…cial e¤ect of ‡exibility in a small state increases with its ine¢ ciency in providing public services and with the degree of international openness.

No abstract

Environmental innovation, Tradable emission permits, Cournot interaction, D43, L13, Q55,