Document Type
Working Paper
Publication Date
1997
College/Unit
Regional Research Institute
Document Number
9706
Department/Program/Center
Regional Research Institute
Abstract
This paper uses game theory to analyze the practice of offering incentives to attract new firms to localities. It demonstrates that in trying to attract firms localities are faced with something like a prisoner’s dilemma: they are compelled to offer incentives but would be better off if they could agree not compete for firms. The dilemma that localities face explains why the bidding war for firms continues to escalate despite calls by economists and politicians for disarmament.
Digital Commons Citation
Ellis, Stephen and Rogers, Cynthia, "Local Economic Development as a Game: We’re Caught in a Trap, I Can’t Walk Out …" (1997). Regional Research Institute Working Papers. 180.
https://researchrepository.wvu.edu/rri_pubs/180