Title: Governments at the bidding table
Authors: Van Biesebroeck, Jo # ×
Issue Date: 2010
Series Title: Canadian Public Policy vol:XXXVI pages:S31-S47
Abstract: Recently, several governments in Canada have shown an increased willingness to subsidize private investment projects, especially in the manufacturing sector, to the dismay of tax conservatives. I evaluate under what circumstances these government subsidies make sense, paying particular attention to the efforts of the Ontario and federal governments to attract new investments in the automobile sector. I show what governments should expect to pay when they join a bidding war and derive the expected welfare gain. The analysis suggests that, in contrast with the public debate and many previous studies, it is not the absolute size of benefits that matters, but the relative private attractiveness for the investing firm and the relative size of externalities in each location.
ISSN: 0317-0861
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Econometrics, Leuven
Department of Economics, Leuven - miscellaneous
× corresponding author
# (joint) last author

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