Ralph Ossa, University of Zurich: A Quantitative Analysis of Subsidy Competition in the U.S.
Department seminar. Ralph Ossa is a Professor of Economics of Globalization and Emerging Markets at the University of Zurich. He will present a paper entitled "A Quantitative Analysis of Subsidy Competition in the U.S.".
Ralph Ossa. Photo: University of Zurich
I use a quantitative economic geography model to explore subsidy competition among U.S. states. I ask what motivates state governments to subsidize firm relocations and quantify how strong their incentives are. I also characterize fully non-cooperative and cooperative subsidy choices and assess how far away we are from these extremes. I find that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. I also find that observed subsidies are closer to cooperative than non-cooperative subsidies but the potential losses from an escalation of subsidy competition are large.
Host: Andreas Moxnes