Subsidy competition and the mode of FDI

Facundo Albornoz-Crespo, Geogory Corcos, Toby Kendall

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


We model subsidy competition for a foreign MNC's investment in two trading partners. Taking into account acquisitions as an alternative investment mode weakens the case for subsidising greenfield investment. Competition between countries results in welfare losses. which are reinforced by positive externalities from the MNC's presence and regional integration. The results also apply to situations where the acquisition price accounts for the possibility of subsidies and when governments use acquisition subsidies as an alternative to greenfield subsidies. (C) 2009 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)489-501
Number of pages13
JournalRegional Science and Urban Economics
Issue number4
Publication statusPublished - 1 Jul 2009


  • Regional integration
  • FDI
  • Mergers and acquisitions
  • Positive externalities
  • Subsidy competition
  • Greenfield investment


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