Estimating the rivalness of state-level inward FDI

We develop a method for estimating the rivalness of tax bases using the structures of the conditional logit, Poisson, and nested logit models. As an illustration, we apply this method to estimate the effect of state-level capital taxation on U.S. inward foreign direct investment (FDI). The assumption of perfect nonrivalness can in some cases be rejected, but the assumption of perfect rivalness cannot. Competition over FDI across U.S. states could well be a zero-sum game.

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