Ralph Ossa’s research focuses on international trade. At the London School of Economics, he earned a diploma in economics with distinction in 2002, a master's degree in economics with distinction in 2003, and a PhD in economics with a dissertation entitled "International Trade and Economic Development" in 2007. Ossa joined Chicago Booth in 2008. More >>
Abstract
U.S. state governments spend vast resources on business incentives trying to attract firms. In this paper, I ask what motivates such business incentives and explore how they interact nationally if they are set competitively or cooperatively. To this end, I explore a quantitative economic geography model which I calibrate to U.S. states. I find that state governments have strong incentives to subsidize firm relocations in an attempt to benefit at the expense of other states. However, states tend to lose from rampant subsidy competition so that there is scope for mutually beneficial cooperation.
Last Updated: Nov 14, 2014