The paper analyzes the effects of a regionally coordinated profit tax in a model with three active countries, one of which is not part of the union, and a globally mobile firm. We show that regional tax coordination can lead to two types of welfare gains. First, for investments that would take place in the region in the absence of coordination, this measure can transfer location rents from the ...

This paper, to our knowledge, is the first examine herding in foreign direct investment (FDI). We investigate it from two perspectives, number of countries investing host country and then dollar volumes those investments. Our results provide strong evidence FDI. also show divestures these investors. that FDI related characteristics governance parameters.