The Dynamics of Firms Location: A Revisit of Home Attachment under Tax Competition

In this short note we extend the home attachment setting of Mansoorian and Myers (1993) and Ogura (2006) to allow the study of tax competition in a dynamic framework when international business relocation occurs over successive periods. The dynamic framework we propose also helps to understand why tax rates may change over time. Our modified home-attachment rule is illustrated by a simple model of dynamic tax competition in discrete time.