Resumen de Regional Integration and the (Re)Location Choice of MNCs
Facundo Albornoz, Gregory Corcos
How does regional integration affect the location of MultiNational Companies, and member countries� investment incentives? The welfare effects of integration and subsidy competition are found to depend crucially on market structure, technological differences, ownership, positive externalities to the MNC�s investment and the interplay between subsidies and tariffs. We show how Subsidy Competition may reduce welfare relative to the mutual interdiction of subsidies. We find justifications for intra-regional transfers and identify under which conditions the gain associated with supra-regional agreements increases with integration. We also identify conditions under which, with a local MNC in oligopoly, integration may reduce regional welfare.
