Competitive subsidization in regional development

Daniel G. Brooks

Research output: Contribution to journalArticle

2 Scopus citations

Abstract

This paper uses a game-theoretic bidding model to analyze the process in which regional areas attract new companies by offering subsidies. It is shown that this is not a 'negative-sum game', and that companies tend to locate in those regions for which they have the greatest value. A constructive methodology for quantifying the value of the firm to a region including both direct and indirect benefits is developed. A non-cooperative equilibrium bidding strategy is developed for competing regions which expands on some of the behavioral conclusions in Hands and Mann (1987). Dependent value estimates by the regions and the region's attitudes toward risk are shown to influence optimal bidding strategies for new companies.

Original languageEnglish (US)
Pages (from-to)589-599
Number of pages11
JournalRegional Science and Urban Economics
Volume19
Issue number4
DOIs
StatePublished - Dec 1989

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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